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Maintain ethical processes in your supply chain

By Retail Technology | Friday March 15 2013

Appearance is everything, not only in the fashion world. But when it comes to sourcing and procurement, ethics count too according to supply chain management expert, Sarah Heath

The majority of consumers would not accept clothing if they knew it was originated in sweatshops or by other means incongruent with retailers’ image. The same in the food industry; consumers expect responsibility, and it is not enough for retailers to simply walk the walk – they must embody their reputations and keep their supply chains clean. 

Retail Technology spoke exclusively to Sarah Heath, a key account manager at supply chain management software provider ediTRACK about how most consumers don’t appreciate the complexity of a typical supply chain. In particular Heath flagged those that involve the transportation of livestock; "a logistical nightmare involving animal tagging, passports and piles of movement notification paperwork," she commented. So the news that European food supply chains had been compromised with horsemeat left many consumers surprised and disgusted. 

"Consumers simply expect – rightly – that food retailers’ supply chains will provide them with the product advertised on the label," Heath said. Surprise is understandable from a consumer perspective, but supply chain error and fraudulence is not a new problem, it is just one that hasn’t received global interest – until recently. 

Scandal shakes consumer confidence

"The horsemeat disaster has highlighted the need for improved visibility of supply chains," she added. "Supermarkets are suffering – consumer confidence has been shaken, and with tests still on going, it seems that no retailer can be totally confident in their products, sales and reputation. The industry is under a great deal of pressure to ensure ethical practices in their supply chains by obtaining greater visibility of all processes and suppliers from ‘farm to fork’."

The horsemeat scandal focused attention on the food industry, but the issues of supply chain security and ethical trading applies to every industry. "Other retailers (clothing, electronics, pharmaceuticals) – are regularly exposed to supply chain security issues; it can be very difficult to authenticate the ethics of suppliers and the validity of manufacturers, especially in horizontal set-ups, where primary sources are often located overseas and audits are carried out by third parties," explained Heath. 

Many retailers already use supply chain software that enables them to keep a close track on where products are in the supply chain, and to efficiently manage their inventory and improve service levels. "We work with a number of fashion retailers to put in place solutions that give them maximum visibility of every stage in their supply chains, including the tracking and management of all their factory and supplier audits," said Heath. "This enables retailers to monitor the status of each factory or supplier they use, including the implementation of corrective action plans. This not only ensures quality products are delivered to the consumer, but also that working conditions in their upstream supply chains are fair."

Achieving real-time supplier traceability

The supply chain expert also pointed to another advantage for retailers, who can quickly establish the best suppliers and manufacturers, through real-time access to complete audit results and the ability to proactively identify and rectify serious issues before they arise. "This is especially useful for ensuring appropriate ethical practice in long, complex supply chains involving perishable goods, where maintaining short lead times is a priority," she added.

"You can never fully eliminate dishonest activity in a supply chain, but you can minimise it by implementing real-time traceability. Forward-looking businesses understand the need to closely monitor their supply chains to protect their brands, and it’s likely that we will see a significant increase in demand for solutions that can help businesses to trade ethically by providing greater visibility of audit results down to origin factories."

In the meantime, the horsemeat scandal, which has seen some products testing positive for up to 100% horsemeat, continues to rock Europe, with more than 20 countries implicated. Tests for equine DNA in products ranging from ready meals to children’s sweets are on going, revealing the complexity of the supply chains involved. The furore has damaged the reputations of retailers that have stocked the tainted products, and will have serious repercussions for manufacturers. 

Heath concluded: "For many retailers it’s too late, and the after-effects will be catastrophic; frozen burger sales fell by a whopping 43% last month. Now that supply chain issues are on the boardroom agenda, many businesses will be looking for ways to get a better grip on their supply chain practices."

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