Sep 17, 2024
The Essential Role of Supplier Responsibility for Sustainable Growth
Supplier responsibility is no longer a “nice-to-have".
As global supply chains become more complex and interconnected, the need for suppliers to act in a responsible, sustainable, and compliant manner has never been more pressing. This ensures that you meet your legal, environmental, and social obligations across the entire value chain, as well as increasing efficiency and boosting stakeholder morale. In the words of Google:
“A responsible supply chain isn't just the right thing to do for people and the planet — it's also good for business.”
However, this often requires intervention from your business so that your suppliers have the knowledge and resources necessary. You have to empower them so that they are able to adhere to your standards, mitigate all inherent risks, and take advantage of the opportunities available.
This article explains why we, at Beebolt, believe that supplier responsibility is vitally important to businesses and our suggestions for how businesses can support and manage their suppliers in becoming more responsible.
What is supplier responsibility?
Supplier responsibility refers to companies ensuring their suppliers operate ethically, sustainably, and in compliance with regulatory and quality standards. This involves monitoring and managing the environmental, social, and operational impacts of suppliers throughout the chain, especially in intricate and multi-tiered networks.
By ensuring that suppliers meet these standards, organizations can mitigate risks, reduce supply chain costs, and nurture long-term sustainable growth.
The underlying concept is that every supplier in a supply chain should be able to perform their role in accordance with the rules and standards because all parties in the chain rely on each other to succeed. If one supplier struggles, it can impact the whole chain, making it key that everyone is supported and able to perform effectively.
There are a number of industries in which supplier responsibility is particularly important. The top three are:
Electronics – Components often include conflict minerals, which companies should ensure they source responsibly. It is crucial for organizations to be confident their suppliers also adhere to strict regulations in this field.
Food – Regulatory authorities place robust health and safety standards on businesses to avoid customers suffering due to contamination. Companies must be sure that all suppliers work in accordance with the legal framework.
Fashion – The industry has been criticized previously for using sweatshops and child labor. This means that companies that want to prove their ethical credentials must be certain that their suppliers implement suitable working conditions.
Why supplier responsibility matters
Risk mitigation
Poor supplier practices can result in serious disruptions for your business, from severe financial sanctions for environmental violations to reputational damage related to unsafe working conditions.
Companies that adopt robust supplier responsibility programs can reduce the risk of these negative outcomes by helping their suppliers find ethical ways in which to conduct their operations.
When these disruptions occur, it can lead to delays in receiving goods and materials as you conduct investigations or search for replacement suppliers. This can reduce your ability to meet the needs of your customers. Proactively managing supplier operations allows you to reduce bottlenecks, maintain continuity, and avoid penalties and damage to your brand.
Sustainable growth
There is a global focus on sustainability as the effects of climate change become more clear and social movements gain traction. For example, OpenText found that 88% of consumers around the world would prioritize buying from companies that have ethical sourcing policies in place.
The practices of your suppliers directly feed into your ability to claim to be a sustainable business. This is why it is essential to work with suppliers to minimize waste, reduce carbon emissions, implement fair working practices, and ensure they conduct their operations in an ethical manner. Apple, for example, provides a code of conduct for its supply chain that insists entities within the chain “provide safe working conditions, treat workers with dignity and respect, act fairly and ethically, and use environmentally responsible practices wherever they make products or perform services for Apple.”
By aligning your supply chain with global sustainability goals, you can position yourself as a leader in ethical practices, contributing to the long-term growth of your business.
Operational efficiency
Those companies that have in place responsible practices often experience improved productivity, cost savings, and other higher-quality outputs. For example, when suppliers streamline their operations to reduce energy consumption, they not only comply with the sustainability requirements, but also reduce operational costs. These savings can be passed onto the buyer, making for a more cost-effective supply chain.
Additionally, when suppliers meet your stringent quality standards, it reduces the risk of them delivering defective goods or materials. This leads to fewer returns and, crucially, an improvement in customer satisfaction. It also provides peace of mind in industries like aviation, where precision and quality are non-negotiable.
6 ways to implement supplier responsibility
Establish a supplier code of conduct
By making sure that your expectations and non-negotiables are down in writing, you can better hold your suppliers to account. Develop a clear and concise code that outlines your approach to ethics and compliance, and distribute it to all existing and potential suppliers, with the requirement that they acknowledge and commit to its contents.
Conduct supplier self-assessments and audits
Provide your suppliers with self-assessment questionnaires to rate their compliance with your responsibility standards. Review the submitted assessments to understand the current state of compliance and identify any areas in which you need to act. If necessary, follow up with audits to verify the information provided by the suppliers.
Require certifications and compliance documentation
Having your suppliers work to achieve industry-recognized standards helps to reassure you that they are implementing the right sorts of practices. Depending on your standards, you can require them to hold a relevant certification such as ISO 14001 (Environmental Management) or SA8000 (Social Accountability). Make this an obligation during procurement.
Ensure regular communication
Entities can understand better how each of them works and what the best practices are if they are in regular contact with each other. Open the lines of communication to discuss your expectations and to help suppliers find the answers to challenges that are in the way of them acting in a responsible manner. Collaborate on developing their processes rather than dictating them and leaving them to find their way alone.
Make sustainability your competitive advantage as a supplier
The Beebolt Boost program is here to help you meet even the most stringent buyer requirements when it comes to sustainability. Tailored specifically for suppliers, it provides all the tools you need to streamline your responsibilities and thrive. From automating compliance processes to unlocking exciting new revenue opportunities, Beebolt Boost helps you get ahead of your competitors, all while meeting the highest industry standards.
Set the standard for supplier responsibility
We are forming a Supplier Responsibility Advisory Council composed of industry leaders who are committed to advancing responsible practices within their supply chains. As a member, you will:
Influence industry standards: Help shape the guidelines and best practices for supplier responsibility across your industry.
Support your suppliers: Provide guidance and support to your suppliers in adopting responsible practices through the Beebolt Boost program.
Collaborate with peers: Engage with other leaders in the supply chain industry to share insights, strategies, and innovations.
Conclusion
Supplier responsibility is no longer a “nice-to-have,” but a strategic imperative. It helps you to avoid or mitigate risks, drive sustainability, and create a more efficient and productive supply chain. By working with your suppliers, you can ensure you get the highest quality products, goods, and services to ensure you deliver for your customers every time.