Ethical and sustainable supply chains – by Rob Stummer

Disruptions to global supply chains have put increasing pressure on the environment and on workers rights. Here Rob Stummer explains the threats and the ways that manufacturers can ensure their supply chains remain ethical and sustainable, despite pandemic pressures.

There’s no doubt that the pandemic has put global supply chains under extraordinary pressure, with everyone still relying on them to deliver essential goods despite some national and international borders being closed in Australia until early 2022.

A crisis such as the pandemic often brings opportunity, but unfortunately the economic hardship felt by so many can also encourage unscrupulous and illegal activities.

Australian manufacturers and distributors need to be extremely vigilant that ethics and sustainability do not go out of the window as global economies begin to recover and new opportunities arise.

The pandemic effect on the environment

There have been negative environmental consequences with a huge increase in the use of single-use plastics and not surprisingly disposable Personal Protective Equipment (PPE) use has soared.

The indiscriminate use and disposal of disinfectants, masks, gloves and untreated waste poses a major threat to public health and the environment since it causes air, water and soil pollution.

In addition, lockdown, isolation orders and quarantine have led to a major increase in demand for online shopping and home delivery, which has resulted in a significant increase in household waste in the form of shipped packaging materials such as cardboard and polystyrene.

Not to mention, the rise in carbon emissions created by the increasing number of delivery vehicles, often only carrying one box to each customer.

Worker exploitation

It is not just sustainability that needs to be put under the spotlight as we recover from the pandemic, because ethics also come into play when we look at what is happening to our global supply chains.

Significant disruptions have put pressure on these supply chains to reduce costs.

A combination of increased unemployment in some sectors like clothing and growing demand for labour in sectors like agriculture, food and beverage production, pharmaceuticals and electronic components, means there is a real risk of worker exploitation.

According to the UN, 60 percent of worker exploitation is linked to the manufacturing sector and it is urging member states to take steps to eradicate worker exploitation.

Supply chain audits

The only real way to ensure a supply chain is both ethical and sustainable is to fully audit every single supplier in person, however there are significant cost implications of doing this properly.

Due to the pandemic this type of in-person supplier auditing has been extremely challenging due to travel restrictions and international border closures.

What’s needed are industry specific supply chain audits conducted by an official industry body in each country or region, which then provides an independent accreditation to each supplier confirming that they are conducting their business in an ethical and sustainable manner.

To support this safeguard, legally binding clauses need to be included in supplier contracts to ensure that they are both ethical and sustainable.

There is also an ongoing and growing real demand for ethical and sustainable products.

Oxfam launched its Fair Trade program many years ago and has made definite progress towards making world trade a lot fairer for the workers and small businesses it deals with.

There are many sustainable fashion companies that have popped up in Australia in recent years and Glam Corner, that allows people to rent rather than buy occasion wear, has seen a lot of demand.

Supply chain visibility

Having a thorough understanding of where raw materials, products and inventory are sourced from can provide the necessary supply chain visibility required to conduct a detailed audit.

This is integrated with their Enterprise Resource Planning (ERP) system and provides the visibility throughout the supply chain to help manage disruption, thereby reducing risk.

A core tenet of supply chain visibility is data availability throughout all levels of the organisation. This allows everyone to understand production schedules, deadlines and status of orders. This leads to process optimisation and quicker response to any disruptions or delays.

As more businesses outsource parts of their supply chain, visibility is more important than ever.

Using a single source of supply chain data, manufacturers, distributors and suppliers can collaborate and communicate more effectively with suppliers that are accredited during an audit process, leading to greater accountability in terms of ethical and sustainably sourced raw materials.

Conclusion

The increase in the awareness of worker exploitation globally among consumers, businesses and governments in recent years has resulted in an increased demand for goods produced under fair labour standards. Businesses are expected to have full visibility of their supply chain, act when necessary and work with ethical suppliers.

With full supply chain visibility, businesses can make the right decisions in real-time and not only remain compliant, but also to ensure efficient operations, improved profits and above all, happy customers.

Rob Stummer is the CEO for SYSPRO APAC. With nearly 20 years of leadership roles, Rob is a senior technology industry leader who lives and breathes client success through the application of relevant technology, including SaaS and cloud solutions. Rob enjoys finding a vision, creating a strategy with purpose, and then connecting people through collaboration, engagement and open communication.

Picture: Rob Stummer

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