One of the most important steps necessary when developing an ethical supply chain initiative is to make all parties ” corporate executives, employees , NGOs, suppliers, consumers, trade unions, investors ” aware of the importance of the program, and to gain acceptance and support among these various stakeholders.
Consider the parties that will typically be interested in a company s supplier monitoring program (see Figure 12-1): It is important to find a way of introducing your code, says the Natural-Resources Institute, that is non- threatening , positive, and that makes sense to the audience in question. [1 ]
The best way to understand who that audience is and what they need from your company s ethical supply chain efforts (as we have learned from countless enterprise change initiatives and business process reengineering projects in the last decade ) is to involve all the important stakeholders in the process from the outset. This includes getting stakeholders involved in the early steps of selecting and customizing the codes and standards themselves. There is no more effective technique for communicating the need for a code and creating a sense of shared ownership. (It is surprising how many companies still develop stakeholder expectations without ever actually speaking with the stakeholders themselves .)
This cooperative development process means not only that each party has input to the development of codes and standards selection and the creation of performance indicators ” making these more realistic and workable ” but also it means that each party is given an opportunity to think carefully about what the ethical supply chain program means to them and what their constituency wants to achieve. This, in fact, is where the AA 1000 process standard is invaluable, in that it helps a company identify and involve various stakeholders in the standards development and implementation process.
From a company point of view, there are several important steps in this awareness-building process:
Identify Key Stakeholders. The stakeholder analysis should include those who will benefit both directly and indirectly from implementing the codes, as well as those who will be responsible for the success of the ethical supply chain program itself. In identifying stakeholder groups, contends Business Strategy for Sustainable Development, management should consider every business activity and operating location. Some stakeholders, such as shareholders, may be common to all activities or locations. Others, such as local communities, will vary according to business location and activity. Finally, the stakeholder analysis needs to consider the effect of the business s activities on the environment, the public at large, and the needs of future generations. [2 ]
Create a Stakeholder Profile and Statement of Needs and Expectations. This document will help the CERO and his or her team understand how each shareholder group will be affected by the program. That stakeholder profile, says the Natural Resources Institute, can best be created by addressing several straightforward questions:
What are the likely costs and benefits of compliance to each audience group?
Is the audience more likely to find some aspects of the code more sensitive or difficult to implement than others?
What are the types of constraints they are likely to face in implementing the code?
Do you have the power and interest to help overcome some of those constraints? [3 ]
This process of developing a profile for each stakeholder group should help a company understand the three or four major social and environmental issues on which the company will be judged.
Carefully Choose the Method of Communication. Each group of stakeholders will require a different, individually customized approach. For example, corporate employees must be given education and training on the company s ethical framework, codes, and standards of conduct. Those employees that will have direct responsibility for conveying or enforcing those ethical standards outside the company ” procurement officers, sourcing staff, supplier program team members , quality control or sales staff ” will require more in-depth training on standards and expectations.
Moreover, different stakeholder groups may require a different media for explaining the program. Investors, for example, will want to understand how the ethical supply chain program will ensure share price stability and help the company to manage risk, and will probably prefer a detailed, formal report describing the company s ethical framework and standards policies. Factory workers, particularly in developing-world production sites, may speak a variety of local dialects or be illiterate, and therefore may require face-to-face discussions to explain the process, expected standards, and methods for revealing company infringements (a very sensitive issue). They may also feel more comfortable having the standards program explained to them by a local union representative ” someone that they trust and who understands more intimately their daytoday operational realities. Similarly, instead of e-mailing a policy statement or sending company monitors , there may be real advantage, at least initially, to having the CERO approach senior supplier management, establishing a contact and rapport at a higher, more personal level. In short, the communication program should be tailored to each stakeholder group, and should take into account how the group normally receives news or policy information.
The Natural Resources Institute suggests that each stakeholder group should have a dedicated program for providing essential information concerning:
Why. Why a code has been developed in the first place. Who is driving the process. Where does the target audience fit in, why should they be concerned about the code.
About the Code Itself. What s in the code, what issues does it cover.
Progress/Stage in Implementing the Code. What is the current status ” is it a pilot stage, or are all suppliers being asked to comply ?
The Code Process/Cycle. Induction/period for getting up to speed, first audits , subsequent audits, what happens in between audits, who audits.
What You Expect from the Target Audience. What are their responsibilities in the process, and the time-scale for achieving obligations.
What They Can Expect from You. What obligations/responsibilities you have to them, what support you can offer them, what support they will not be entitled to.
Implications of Compliance/Noncompliance. How do you decide whether a producer is compliant or not, what happens if producers do comply, what happens if they don t comply.
Confidentiality of Information Provided. Reassuring the target audience about the confidentiality of any information provided (e.g., this is important in the case of workers providing information on working conditions for an audit), and the procedures for ensuring confidentiality.
Any Other Specific Implications for the Target Audience. [4 ]
Whatever approach your company decides to take to stakeholder communication and involvement, obviously one of the most important stakeholder groups will be the company s supplier community itself. Building on the basic principle of strategic sourcing and supplier management from the supply chain revolution of the 1990s, a company s most important task when designing an ethical supply chain framework is ultimately to select, negotiate with, monitor and audit the social and environmental performance of its key suppliers. Known as a Supplier Program, this is increasingly becoming a required core competency in the modern manufacturing and distribution company, and something we turn to in the next chapters.
[1 ] Building Awareness and Support for Codes, NRET Theme Papers on Codes of Practice in the Fresh Produce Sector, Natural Resources Institute, p. 4 at www.nri.org/NRET/TP5.pdf.
[2 ] Business Strategy for Sustainable Development, from bsdglobal.com/tools/strategies. asp.
[3 ] Building Awareness and Support for Codes, ibid.
[4 ] Building Awareness and Support for Codes, ibid.