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Corporate Responsibility: Impact on Supply Chain Management

The words, "corporate responsibility" have gotten a lot of attention over the past several years. When substandard manufacturing processes or unethical working conditions attract a media spotlight, public backlash affects every party in the supply chain. The resulting negativity can ruin a brand's reputation, destroy supplier trust, and cost millions in customer loyalty. Here are a few tactics you can use to improve your companies corporate responsibility.

What is Corporate Responsibility?

The Financial Times defines it as "a corporation's responsibility to its stakeholders, including customers, suppliers, communities, shareholders, other financiers, and society at large."

Being a responsible corporation involves consistently abiding by ethical principles and conducting business with honesty, integrity, and respect. It also involves taking responsibility for any and all actions your company takes - whether right or wrong. Last but not least, it involves building value, both for your stakeholders and for the community at large. So how do you incorporate corporate responsibility into your company supply chain?

Focus on Transparent Communication

As a logistics company manager, you can't assume that your suppliers and manufacturers know about your ethical policies. This is especially true if your company is involved in global manufacturing and distribution. Overseas suppliers often have less stringent regulations and safety requirements than those in the US.

Before you enter a contract with a supplier or manufacturer, be sure to communicate your ethical expectations in a clear manner and place your objectives in writing in your contracts. That way, there will be no confusion regarding activities you find unacceptable. If your supplier is unwilling to meet your minimum requirements, it may be in your best interests to find another supplier.

How Do You Get Buy-In? Demonstrate Benefits of Corporate Responsibility

Logistics companies and corporate responsibility don't have to live in a vacuum. Ethical practices can be adopted throughout the supply chain to the benefit of everyone involved. By illustrating the marketing advantages of adopting ethical working operations to suppliers and manufacturers, they may be more inclined to accept these principles.

Provide buyer research data and show how positive purchase trends could impact your business partner's bottom line. Then provide advice and on how they can improve supply chain management on their end. When suppliers and manufacturers can see how simple and profitable maintaining ethical responsibility can be, they'll eagerly follow suit.

What Happens When You Ignore Corporate Responsibility

Big companies who have seen the dark side of media attention serve as real-life examples of what not to do. For example, the way BP handled their massive oil spill all those years ago still haunts people's memories. To date, many people still equate BP with ducks and sea animals covered in oil.

As another example, Sea World has faced a ton of negative media attention since the documentary Blackfish was released. The film, which accuses the park of treating their animals poorly, was a turn off to many people. To date, Sea World is still struggling to come up with creative ways to recover from massive net profit losses.

The Bottom Line

Your consumers and stakeholders are watching. Make an effort to focus on ethical business practices and building value, and be vocal about what you're doing to benefit society at large. Doing so will help you boost your brand image, increase loyalty, attract new customers, and keep your company away from negative media attention.

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