What is ethical supply chain management and why is it important?

Discover the key components and business advantages of ethical supply chains in this informative blog post.

Learn all you need to know about ethical supply chain management; from what it entails as a career, to its far-reaching impact on communities, individuals and the environment.   

What is supply chain management? 

Supply chain management involves overseeing the planning, coordination and supervision of the movement of goods, services, information and even funds. This involves input from the procurement of raw materials to the delivery of the product at its final destination, with an ultimate aim of a cost and time efficient flow from start to finish. 
 
The Supply Chain Manager’s role is a logistical one; to coordinate, organise and oversee all activities involved in the movement strategy, from identification, acquisition, production and distribution seamlessly.

This role also involves risk assessment, in identifying and mitigating potential disruptions to the supply chain, such as capacity constraints leading to production backlogs or natural disasters and disruptions.

However, there are many ethical issues and considerations in supply chain management which may be overlooked in standard, non-ethical supply chain management roles.

What is an ethical supply chain? 

Ethical supply chain management has a slightly different focus. Standard supply chains have an overall goal of efficient flow of goods, services and information to meet market demand, which often means placing importance on operational efficiency and cost reducing at every opportunity.  
 
Whereas an ethical supply chain places much more emphasis on sustainability throughout the processes, fair labour practices for workers, responsible sourcing and maintenance of supplier relationships, responsible sourcing of materials and considers the impact of each stage on the environment and communities. 

Key components of ethical supply chain management 

As previously mentioned, there are many considerations that Ethical Supply Chain Managers must take into account, which may be overlooked or simply disregarded altogether by standard, non-ethical Supply Chain Managers.

Some of the key components of ethical supply chain management include: 

Upholding human rights and fair labour practices

By implementing key measures and holding themselves accountable to a standard, human rights and fair labour practices are adhered to throughout the supply chain.

This can cover a number of elements impacting workforces, including establishing a comprehensive code of conduct that outlines expectations for suppliers, including fair wages, safe working conditions, reasonable working hours and prohibition of child labour and forced labour, as well as regular monitoring and reporting. 

Environmental sustainability and responsibility

By integrating environmentally conscious practices throughout their operations, supply chain management is able to promote environmental sustainability and responsibility.

This includes considerations such as energy efficiency, sustainable sourcing, use of responsible materials, waste reduction, water conservation and circular economy practices. 

Social and community impact

Ethical supply chains play a huge role in the wellbeing of the communities they directly impact.

By fostering positive relationships with manufacturers and suppliers, promoting fair practices (often adhering to the Fairtrade Foundation’s Fairtrade Minimum Price safety net and an additional Fairtrade Premium), and contributing to the wellbeing of workers and their wider communities.

This gives economic empowerment and allows where necessary, workers to not just survive, but to thrive and support their families and community. 

What are the business benefits of ethical supply chain management? 

Ensuring that the supply chains your business is involved with are ethical is important for many reasons, some of which are listed above.

However, there are also business benefits from trading in ethical supply chains. These benefits can contribute to long-term success, brand reputation and overall sustainability of the business.

Some of these business benefits include: 

• Giving the business a competitive edge in the market  

• Attraction of ethical and responsible investors  

• Enhanced brand reputation and trust in the brand  

• Opening doors to new markets  

• Increased employee and customer loyalty 

• Improved supplier relationships  

• Cost saving – for example, reducing waste by utilising byproducts 

Ethical supply chain management courses 

UCLan's MSC Supply Chain Management will give you the skills to evaluate and then apply ethical, socially responsible, and environmentally conscious business practice 

This two-year course is part-time and fully online, meaning you can fit your studies around your other commitments to strike the perfect work-life balance.  
 
By seamlessly integrating aspects of finance, global business and human resource management throughout this CILT-accredited course, you’ll view the supply chain as it is in the real world: one of many interrelated components within a huge, complex and dynamic network.

It’s this kind of big picture insight that will set you apart from other candidates when applying for Supply Chain Management jobs: