expand - DKSH.com

Thought leadershipContractors should physically go and inspect production processes to ensure standards are followed.lution to track supply chain information.DKSH is using a platform that allows thecompany to consolidate and track informationrelated to the European Community’sRegistration, Evaluation, Authorization, andRestriction of Chemicals (REACH) regulation,which requires companies to discloseinformation about all the chemicals they import.By consolidating data into a single databasethat combines details with automatictracking, DKSH has minimized risk of noncompliancewhile improving visibility.Creating a transparent environment wheresuppliers keep their contractors informed ofany amendments or modifications is alsoimportant. To ensure ongoing compliance,contractors should verify that suppliers havea change management process in place; if asupplier undertakes major changes, contractorsshould physically go and inspect themagain, Kiesler recommends. Change managementis followed by consistency. Samplesmust be representative of entire shipments.Mattel learned this lesson in the hard way.Robert Eckert, its CEO, has said the companyused to test toys only randomly butthat it now tests every single batch.Such standards can increase costs and in theshort term companies may even lose businessover them. “If you increase your standards,you lose some partners,” Koller agrees, but beingcompliant and having a reasonable levelof standards pay off over time. This is especiallytrue when it comes to averting a consumeror regulatory backlash, where less ethicalfirms may have their practices exposed.This makes considerations of ethics an integralpart of any supply chain evaluation today,especially when it comes to selectingsourcing partners, along with harder metricssuch as cost and speed. In the long run, serviceproviders who are able to guarantee anethical supply chain have a clear competitiveadvantage in a marketplace where compliancewith regulations as well as social andenvironmental standards is becoming increasinglyimportant.Kim Andreasson is Managing Director of DAKAadvisory, a consultancy. He is the editor of severalmajor research programs on corporate socialresponsibility and supply chains. He is currently basedin Ho Chi Minh City, Vietnam.FactBoxHow to ensure an ethical supply chainWhen selecting a supplier, look at their sustainabilitypolicies and practicesDo an inspection before you start to work witha supplier and make them understand your requirementsIntegrate the time and resources for handlingknown regulatory issues, such as REACH, intoyour supply chain planningGet on the ground and get to know your businesspartnersCreate transparency, consistency, and ensureany changes are communicatedWork hard to make sure everyone feels like apartner and that everyone makes money fromthe arrangementGet the balance right and implement a systemthat is both ethical and sustainable34 expand 01/2011