Comment: suppliers, prioritising issues in the value chain

July 01, 2001

When a product accidentally becomes contaminated, the costs of recall from market are very significant – so too are the risks to reputation. Companies have a business need to find out who did what in their supply chains, so they can work out what went wrong, and who to blame. ‘Great’, say the human rights NGOs. ‘So what’s stopping you from checking up on the human rights issues too?’ When a Nigerian ship went missing in April whilst allegedly carrying child slaves to buyers in Gabon, Cadbury’s got caught up in the debate, as some of its cocoa is sourced from nearby Ghana. But a company like Cadbury has an entirely different supply chain from a Nike, which is being criticised again by the Global Exchange on labour rights. As a garment company, Nike can give (and take back) contracts with a limited number of factories with which it has a direct relationship. Whereas, companies which are manufacturing products from agricultural materials tend to buy each ingredient in bulk through intermediaries. These may be co-operatives, commercial enterprises or government boards: the point is there is no longer a direct relationship between the manufacturer and the farmers who grow and harvest its raw materials. Hundreds of thousands of farmers may have been involved in producing the crop, so it will be extremely difficult to verify the labour issues and standards involved.

The new Dragon’s award category, and Yeo Valley’s success in this year’s Queen’s awards rightly recognise that a company’s impacts extend beyond its owned and operated businesses. Good for Shell, which this year published which joint ventures it had terminated because of poor standards (CAB 57). Good for companies like Coca-Cola, which is responding to calls to mobilise its suppliers to get the technology right to minimise greenhouse gases. Good on Toyota, which is reporting on how it tries to maximise the positives among its 500 North American suppliers.

But the longer the supply chain, the more complex the picture becomes. Companies have to chart their way through the very different interests in the debate, and work out the priority issues for themselves. The best way forward is to start internally, asking who is involved in their supply chains, whether they are being treated fairly, and what the issues are. In the first of two articles, our own Alison Gulliford, and Mick Blowfield from the Ethical Trading Initiative examine what’s involved in more depth, beginning later in this edition.