Mike Landry, senior vice president and global leader for the supply chain service line of Genpact, explains the meaning of “responsible sourcing,” and tells why it’s so crucial to global supply chain management today.

A definition of responsible sourcing must begin with the customer, Landry says. With the pandemic and severe supply chain congestion hampering the flow of products to market, it’s vital to be able to provide shoppers with essential items. At the same time, companies must ensure that they are carrying out that mission in a responsible manner, meeting ethical standards for environmental protection and social practices, including the fair treatment of workers.

In times of crisis, end-to-end visibility becomes key. But that grows progressively more difficult to acquire with each tier of the supply chain, extending all the way back to production of raw materials. To make that possible, companies are beginning to deploy technology tools such as blockchain for recording and tracking products throughout their journey to the customer.

The need to embrace responsible practices is forcing a shift in the priorities of supply chain managers, Landry says. A decade or more ago, the emphasis was on maximizing profitability and minimizing cost. Subsequently, it became important to instill agility into supply chains — the ability to respond to unanticipated shifts in production and demand. Today, risk is becoming another major factor, shining a spotlight on responsible practices.

Do customers care that a brand or retailer is practicing ethical behavior in its supply chain? Landry says they are increasingly holding suppliers responsible for doing just that, especially in the age of social media, when “everyone has a voice in the conversation.” Whether customers will actually agree to pay more for a product that is ethically sourced is another matter, however.