The concept of corporate social responsibility (CSR) has hit the supply chain management with increasing intensity. Now OEMs have to navigate the complexity of getting the supply chain on board.
CSR initiatives span the breadth of the supply chain, including such activities as environmental sustainability, responsible sourcing from global suppliers, and development of green enterprise approaches.
To make sure such efforts don't run aground, supply chain management needs to oversee a variety of CSR activities, including:
- Stopping the dumping of hazardous materials into rivers, seas, and oceans
- Proving that the company has lowered its carbon emissions
- Avoiding material suppliers that employ underage or underpaid workers
- Setting a followup schedule with suppliers and scheduling regular control visits
- Showing interest in and monitoring the activities of suppliers across the breadth of the supply chain
Good CSR drills down the supply chain
Walmart has pushed its CSR activities through its entire supply chain and it has made its efforts public by issuing its Global Responsibility Reports. In 2008, the retailer announced that all its global suppliers would have to comply with social, environmental, and energy efficiency laws and regulations. It went as far as asking its suppliers to attest that their own suppliers have received high ratings on environmental practices. It also asked for reports about social and product safety practices.
Walmart's Global Responsible Sourcing Initiative pays special attention to its more than 1,000 Chinese suppliers. The announcement, made in Beijing, included a plan of action with schedules and deadlines to be completed by the end of 2012. At that time, the company offered time extensions, and the move toward social responsibility has become an ongoing effort.
When the initiative was announcd, Walmart said the goal was to "build a more environmentally and socially responsible global supply chain." CEO Lee Scott said in a press release:
A company that cheats on overtime and on the age of its labor, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honor its contracts -- will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers.
Chinese manufacturers are well known for their lack of CSR, which makes the task of applying new standards difficult. Chris Ferrell, director of the Tompkins Supply Chain Consortium, wrote in a blog post in June that Walmart's efforts to take the lead in global ethical sourcing initiatives and to push suppliers to improve the supply chain have had at least some positive results. Even so, it would be great to know if Walmart effectively ended contracts with suppliers that could not respond to the demands.
Walmart offers a strong example, and it's time for electronics OEMs to follow their lead. It just makes sense. Consider what Niall Fitzgerald, then CEO of Unilever, told the Guardian in 2003: "Corporate social responsibility is a hard-edged business decision. Not because it is nice to do or because people are forcing us to do it... but because it is good for our business."
What are your thoughts on CSR? Is it a nice thing to do, something your supply chain is forcing, or something that is truly good for business? Share your thoughts below.