IN an ideal world or in a utopian world, ethical procurement practices are expected to be the default settings for every business that is worth its salt.
In such an environment, there is need for all business leaders across the industry divide to develop a sense of accountability and recognise that business ethics are no longer a personal responsibility or a business responsibility alone, but is about all of us, our planet and our children.
The “million-man effect” being the guiding principle underscoring that together we are stronger and small actions on every man’s part can make a huge difference. The clarion call, the world over, is that businesspeople can no longer be complicit in the destruction of nature for the price of profit.
It should be common practice for an organisation to do the right thing for itself and for the society from which it derives its value from.
Being aware of this undeniable fact is the first step towards a business fraternity in which everyone is held to account for the common good of the world of business.
As business ethics conversations continue to dominate boardroom agendas, they are those who are of the firm belief that the world of business was never built with social responsibility in mind.
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The general assumption from this school of thought is that in a business operating environment, fiscal imperatives often prevail over business ethics and values. It is further argued that often times, doing what is best for society is akin to sacrificing huge profits. In a competitive trading environment, business ethics can sometimes find itself taking a backseat to commercial interests.
In other words, because businesspeople are often overwhelmed by the need to stay ahead of competition, top management ordinarily assess malpractice for its functional convenience and or institutional merits while ignoring ethical standards driven by the desire to maximise profits. It is, therefore, not surprising that the business ethics arena is where the largest disconnect between intentions and actions often prevail in large measure.
Amidst those corporate conversations on business ethics, corporate leaders are alive to the fact that supply chain management could easily play a significant role as a prime mover for the sustainable adoption of ethical business practices.
Procurement’s unique window into how suppliers are transforming their offerings means it can play a cardinal role in ensuring that the supply chain community conducts business with ethics in mind. In the years gone by, the supply chain fraternity paid relatively scant attention as to whether their supply chain partners were good at promoting ethical business practices making it very difficult to keep ethical breaches at bay.
Fast forward to this day, supply chain professionals shall be required to ensure that ethical business practices change from a minimum requirement to a valuable key competitive differentiator whenever they deal with suppliers.
As world economies evolve into the future, the question of adopting business ethics is no longer a question of if or when, but of how quickly an organisation is prepared to join the bandwagon. Supply chain leaders must, therefore, take this new-found responsibility to heart. It is no longer enough to turn a blind eye on ethics hoping that at some point these issues will go away.
With a cynical public always sniffing for anything that could go wrong, the burden of carrying ethical business practices has been thrust upon every organisation’s shoulders.
The ever-demanding customers are expecting organisations to observe ethical business practices and acceptable labour conditions at every turn of the handle. As is always the case under such circumstances, the appearance of unethical behaviour can be as damaging to a company as the conduct itself.
The corporate conversations on supply chain ethics are firmly in the spotlight, and rightly so, given that consumers social consciousness is expressed through their wallets.
Consumers will not buy products associated with unethical practices.
Consumers are beginning to realise that the supply chain is potentially an area that is highly susceptible to ethical problems, such as corruption, fraud, money laundering, bribery, environmental breaches, gross human rights violations, fake products and or poor- quality products.
The buying public does not care and will not care even in circumstances where the organisation is an unwitting victim or in situations where it is a known fact that perpetrators could be suppliers of a supplier.
It is common knowledge that supply chain organisations may have less visibility into or control over their supplier’s practices due to the complexities associated with a long supply chain network, but consumers of products will not care.
They will continue to hold companies responsible for whatever ethical mishap that may happen in their supply network. There is always an expectation that organisations must be alive to the ethical chain of responsibility by ensuring that no single tier of the supply chain is associated with unethical business practices.
Today’s customers are increasing the scrutiny of unmapped tiers of the supply chain and benchmarking of company human rights performance. Customers can never tolerate or will never tolerate a situation where an organisation’s practices can create a life-or-death situation for someone in another country.
Obviously from purely a moral point of view, there is no customer who wants to buy a product manufactured by someone that died making it. The world markets are alive to the fact that for every product that we eventually buy, there could have been many hands involved to make a purchase possible.
Every commodity that reaches the point of consumption represents the cumulative effort of many hands along the supply chain. But customers still expect those hands to be clean from an ethical point of view.
The other reason why it is important to take care of business ethics emanates from the impact that social media has brought to thebusiness world. Social media can potentially promote a negative blowback by providing quick access to information that can sway the customer’s perception of the organisation. The ubiquity and speed of social media implies that no misstep will go unreported.
With the advent of social media, information is well known to spread like veldfire, with customers always on the look-out for juicy news. And of course, let us not forget what happens to an organisation’s reputation when issues go viral and become fodder for ‘key-board warriors’ who are religious in patronizing the various social media platforms.
Given the prevalence of social media, the court of public opinion has turned out to be unforgiving and supply chains must ensure that brand equity is protected at all costs.
The legal wrangles that can emanate from unethical business practices should also trigger supply chain professionals to deal withonly those suppliers that practice ethical business practices.
Some organisations have found themselves entangled in unnecessary legal wrangles due to disregard of ethical business practices by their suppliers.
Industry practice seems to indicate the risk of litigation and liability is on an upward shift with environmentalists and lawmakers pushing for punitive legislation on business and criminal offences and advocating for stiffer penalties.
It is often said that obedience to the legal statutes is a function of self-belief in their legitimacy and the moral correctness associated with them.
Top management must ensure that the organisational culture should never be allowed to reach a point where members of staff may view business ethics compliance as nothing more than liability insurance for the bosses at the top.
The adoption of ethical business practices by organisations is relatively modest and to a certain extent undoubtedly very slow but it is also easy to see that the legislative momentum and public opinion is only pushing in one direction.
Above and beyond the increased legal risk for organisations that seem to mismanage this delicate issue, there is a difference between what is legal and what is morally wrong.
Over the years, companies have come to realise that the brand equity and the reputation of a company is often more significant than potential penalties or other civil liabilities.
Supply chain practitioners are being encouraged to stick to supply chain and purchasing standards that meet or exceed their ethical convictions, standards that go beyond what is required by law. In some cases, top management may choose to turn a blind eye deliberately in order to maximise returns.
Whenever top management choose to regard ethics as a matter of personal scruples or as a confidential matter between personal individuals and their conscience, they will be failing their organisations.
There is often a tendency to patronise the organisation by treating such unethical business mishaps as isolated incidents perpetrated by malcontents who often do not toe cultural lines of ethical business practices.
Top management executives who are inept in providing competent leadership that drives ethical conduct must be held to account and must share responsibility with those who contrive by design to benefit from corporate misconduct.
The role of top management in business ethics revolves around building enduring structures that give life to an organisation’s guiding values, which promote sound business practices with a view to instil a sense of shared responsibility at any given point in time.
As we go deeper into the business ethics arena, there may be need for traditional rival competitors to adopt collaboration strategies with a view to resolve ‘the tragedy of the common problems’ such as fraud and corruption, that no one company can solve by itself. Supply chain professionals must be seen to be promoting the samefocus on ethics as any other measure of performance. Being a bystander is not an option anymore. Whatever is in your realm of influence, one must feel obligated to do it. All in all, the clarion call and the collective chorus pushing for theadoption of ethical procurement cannot and should not be ignored because when all is said and done, it is only the right thing to do.
Those companies that can prove they play by the book are likely to rise above the rest.
Those firms that “water the shoots of green growth coupled with ethical conduct” today, will certainly be rewarded in large measure, not only reputation wise but also their top and bottom lines shall witness a rise.
The respect of ethical business practices is no longer just for idealists or activists. Building an ethical supply chain takes time and the whole essence is about progress not perfection.
There is need for all of us to put our heads and hearts together to create a workable enduring institutional framework that promotesreligious adherence to ethical business practices. We all know that a sustainable supply chain creates a more sustainable business.
For all intents and purposes, business ethics is, therefore, as much an organisational as a personal responsibility. Focus on what you can do each day to make a small difference.
- Nyika is a supply chain practitioner based in Harare. — charlesnyika70@gmail.com.