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Home » An Ethics-Driven Approach to Supply-Chain Management
Analysis

An Ethics-Driven Approach to Supply-Chain Management

An Ethics-Driven Approach to Supply-Chain Management
February 12, 2020
Rich Sherman, SupplyChainBrain Contributor
Analyst insight: Non-profit association Business Roundtable has made a valuable case for corporations to shift their purposes to promote “an economy that serves all Americans.”

A “Statement on the Purpose of a Corporation” signed by 181 CEOs is asking companies to lead for the benefit of all stakeholders, including customers, employees, suppliers, communities and shareholders.

Instead of a main objective of maximizing profits, these corporations say they’re aiming to improve the future for employees, business partners, communities and the environment by:

  • Delivering value to customers
  • Investing in employees
  • Dealing fairly and ethically with suppliers
  • Supporting the communities in which they work
  • Generating long-term value for shareholders

While many companies believe in corporate social responsibility (CSR), most have yet to fully institutionalize a comprehensive program. The innovators and early adopters are applying Business Roundtable’s new approach to their business models, and developing purpose-driven strategies that embody the full range of CSR, sustainability and ethical supply-chain management principles. 

Here are some key factors:

  • A purpose-driven strategy includes ethical business practices, CSR, performance management, sustainability, regulatory compliance and risk management (brand, financial and operational).
  • This strategy should drive sourcing and procurement practices. Consider implementing a cloud network system that connects with suppliers for registering, operating and managing company standards.
  • Proof of compliance is necessary, and securing supplier commitment to company strategy is critical in order to get compliance from the supplier’s suppliers.
  • Supplier lifecycle and relationship management are important features for technology infrastructure, and collaboration requires continuous monitoring, auditing and information sharing across three dimensions: economic, ethical and environmental.
  • Digital twins and master data management will improve procurement maturity, and supply-network management technology is necessary for steering complexity, cost, compliance and collaboration.
  • As supplier relationships mature, service providers, customers and other transactional partners will be integrated across the market ecosystem.

As purpose-driven strategies drive ecosystem commerce, they’ll lead to eventual adoption of ecosystem resource planning, or ERP 4.0. Those not already pushing these strategies will soon be pushed by customers.

Outlook

Market innovators and early adopters of ecosystem commerce have the best shot at achieving supplier compliance to purpose-driven policies. Soon, this kind of ethical enterprise supply-network management will not be optional.

Rich Sherman is senior fellow at Tata Consultancy Services.

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KEYWORDS Business Strategy Alignment Sustainability & Corporate Social Responsibility
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