Understanding the importance to developing an ethical supply chain and the impact of failure on reputation & brand

The views and opinions expressed in this article are those of the thought leader and not those of CeFPro.

By Shamial Afzal, Head of Supplier Management Governance, Legal & General Investment Management (LGIM)

In your opinion, why is creating an ethical supply chain an important focus 2020/2021?

Increasingly we are seeing more focus and attention being placed on doing the right thing and behaving in an ethical manor across all sectors. Therefore much-needed attention should quite rightly fall on the supply chain. We only have to look at recent events around the globe when it comes to modern-day slavery and exploitation to get a glimpse of the severity and impact this has on people and business. With this in mind, it is paramount that we as supply chain professionals take responsibility in driving an ethical agenda across supply chains in our respective firms no matter what type of sector and business.

How could a non-ethical supply chain impact company brand and reputation?

In my view, non-ethical supply chains can greatly impact both company brand and reputation. Firms are now having to report how ethical they are and being held responsible for their goods and services delivered to their customers. Also, as we see more and more investors asking firms to demonstrate their adherence to ESG targets, statements of failure would have serious negative impacts on a firm’s prospectus and attractiveness to do business.

What advice would give when managing complex infrastructures of supply chains?

In my personal opinion, I would highly recommend a mapping exercise across the supply chain. The aim of this mapping exercise would be to clearly display which processes impact your supply chain and what lies underneath, e.g. follow the trail. By following the trail, you can also identify relevant areas such as Carbon emissions, environmental impact, materials used in goods, people involved in your supply chain and any other relevant areas.

How do you think pressure from the public, social media and press has impacted the industry?

For me, it’s a shame that it taken pressure from the public, social media and press for the profession to highlight the potential ethical issues across supply chains. There is always a balance in my view, although we quite rightly need to highlight those suppliers who are not behaving in the right way. It is refreshing to see more and more examples of good ethical supply chain activity that we should share and promote within different sectors, ultimately so we can leverage those best practices.

What advice would you give when handling third parties who are behaving badly?

I strongly believe in having a robust issue management process in place, making sure you have the right level of visibility and create a good framework. Ideally the framework would allow you to identify bad behaviours quickly and be able to act accordingly. I have always aimed to promote good, open and honest conversations with suppliers. In my experience, having all parties aligned for a common cause seems to bring out the best solutions and behaviours when it comes to ethical supply chain management.

Shamial presented at Global TPRM: Cross Industry, which took place virtually on December 8-9. Click here to view the full event agenda, as well as insights from the event.

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