different packaging , labels and information disclosure for each target market or consumer . The consumers are becoming more and more sophisticated . This is as a result of different cultural diversities in the supply chain communities within which organizations operate and market their products .
New trends and increasing questions for compliance include disclosures on how the actors in the supply chain have complied to ethical sourcing requirements , and whether the data disclosed can be independently verified . This has given rise to ethical sourcing audits on supply chains . Independent ethical sourcing audits provide assurance to consumers and players in the supply chain on the evolving ethical sourcing requirements that have been adopted and complied with .
General ethical sourcing issues that have been amplified include , enforcing zero tolerance policy for child or forced labor ( especially in extractive industries and agriculture ), promotion of fair trade and payments ( do suppliers get value for their supplies and are they paid within terms that provide their wellbeing ?), ensuring safe working conditions for all workers , and compliance with employee protection laws and regulations that promote ethical behavior . It is worth noting that supply chain transparency is now being extended to cover all suppliers in the whole chains of inputs to the products produced / manufactured and delivered to consumers . However , the dilemma being faced is whether to leave this to industry regulators or government agencies to drive ethical compliance or to out rightly have voluntary choice for compliance by companies . Whichever the case chosen , it must be remembered that the customer still remains the king , and to drive competitive edge , there is no option than to meet their needs .
Of course individual company compliance may be costly as compared to when the whole industry adopts defined standards for ethical compliance . The decision for industry standards which are supported by government regulations ( e . g on minimum wage , health and safety assurance ), would greatly complement efforts for voluntary compliance . These must be minimum , but companies must always strive to be ahead of what the customers and consumers demand . Ethical sourcing data exchange is the way to go in order to drive this .
As it looks , the world of big data is here to drive a lot more benefits in supply chains .
So then , data about all suppliers ( including all components used in the manufacture of the product , transportation , handling , packaging etc ) must be easily available , visible and shared on common platforms .
Challenges that impact ethical sourcing may include disruptions like natural calamities , war or even global pandemics like Covid . However , technology can be deployed to achieve supply chain transparency . This involves tracing of products in the whole supply chain and information sharing about how the inputs and components of the product were sourced .
While the supply chain can provide all that information and data , the marketer has to decide on how to package the product and have the required disclosures to the consumers . This cannot be in the small print any longer ! It cannot also be overlooked in the new frontiers of marketing , including ecommerce and marketing in the digital space .
Further with increased last mile deliveries and home deliveries , the disclosures about ethical conformity cannot be wished away . They can impact the after sale processes with many unplanned product returns . Consumer would like to see on the product labels descriptions like “ this product has been ethically sourced ”, or “ this product has been produced in environmentally sustainable manner ” or “ This product has not been tested on animals , no cruelty to animals ” or “ This is an organic product ”. And most importantly , for this to be trusted , the disclosure must provide link that can be used to verify the information and the disclosures made as true . This can even be provided as a bar code to the labels used .
How do the sourcing professionals in supply chain ensure that information about all inputs used in the production have been sourced ethically ? This calls for more visibility in the supply chain . This further includes , the ability to have data on all actors in the supply chain of the suppliers
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The customers and consumers are more enlightened and demanding on product information disclosures . This is another layer of critical requirement in meeting the needs of the consumer and customers . There is no option to doing the right thing ! Compliance is a must .
too . This can be achieved through supply chain data exchange , for example through registration to Sedex and complying with requirements that include data exchange and independent audits and assurance processes .
Increasingly , failures in complying with growing demands for ethical practices in the supply chains will certainly lead to challenges in marketing the products with even dire consequences like product boycotts .
There is no choice in waiting for the regulations to be in place , it is a reality that must be embraced . We are now seeing companies embracing ESG ( Environmental , Social and Governance ) reporting frameworks and disclosures in their annual financial reporting . The social part of ESG reporting is closely related to ethical sourcing . This is reporting beyond numbers which is slowly being adopted as generally accepted reporting requirements and standards .
The customers and consumers are more enlightened and demanding on product information disclosures . This is another layer of critical requirement in meeting the needs of the consumer and customers . There is no option to doing the right thing ! Compliance is a must .
The logistician , the marketer and all players in the supply chain will just have to engage the super gear - ethical compliance is here to stay and might be very fluid .
Michael Nzule is the Finance & Strategy Director of Mitchell Cotts Freight Kenya Limited . He holds an MBA in Accounting with specialization in Marketing , and a Bachelors of Commerce ( Accounting Option Hons ) from the University of Nairobi . He ’ s a member of ICPAK . Views expressed here-in are personal . You can commune with him via mail at : Mikemaithyanz @ gmail . com .