Writing on the abolition of the British slave trade in 1807, G.M. Trevelyan, the historian, called it “one of the turning circumstances in the history of the world”. As we look to Logistics to make a more transformative impact on global business practice, we could turn to the campaign waged by William Wilberforce and the Abolitionists for inspiration in the quest for an ethical supply chain. Here, Transformational Logistics (TL) explores ideas around an inclusive, sustainable and ethical value chain moving goods from source to the consumer; linking it back to ideas set in train by a four hour speech given in the House of Commons in the momentous year of 1789.
A long and winding road
Globalisation has forced companies to develop better, cheaper and faster routes to market – continuosuly. This has generated huge pressures on companies to shorten lead times; place smaller orders with few longer term commitments and, become footloose in search of lowest cost operators. We have seen the growth of Corporate power – many of the majors bigger than the countries they source from and, the move to outsource non core operations creates layers of suppliers that add capacity to Tier 1 but reduce any chance of transparency and challenge ethical consistency down through the tiers.
In the 90s consumers started to question working conditions; then, environmental concerns challenged process, products and packaging design and generated a clear sustainability edge to consumer behaviour. Fair Trade initiatives started to open peoples eyes to the options available such that today, despite the Recession, an estimated 60% of UK consumers think it is right for supermarkets to withdraw non sustainable branded products.
Being an Ethical company is no longer enough. Brands have become aware that consumers want more information on the goods they buy and a failure to respond can trigger serious business risks. Amartya Sen’s On Ethics and Economics (1987) raised the idea that economics can be made more productive by paying greater and more explicit attention to the ethical considerations that shape human behaviour. These days, supply chains and not companies compete so, in terms of business, what happens from end-to-end (source to consumer) matters way beyond price.
Globalisation, as Mauro Guillen’s important work – The Limits of Convergence – elaborates, can suffer from what Habermas has called the “project of modernity” or, what Guillen has termed the “revolt against the normalising functions of tradition”. In other words, the remorseless surge for growth in developing and emerging economies can steamroll diversity; blindly imposing conformity to global standards. Remote rural districts empty as magnetic urbanisation accelerates and a whole raft of ethical questions emerge. Does globalisation impose one best way or, allow for diversity based on ethical considerations?
So, what is ethical trade or, ethical sourcing all about? As with TL, some see it as an umbrella term to cover all types of business practice that use or promote more socially and, increasingly, environmentally responsible trade. The Ethical Trade Initiative highlights the responsibility of buying companies for the rights of the workers in their supply chain such as a living wage; to be able to join a trade union and, to be free from harassment or discrimination. Gender considerations are of key importance here. The work of WIEGO is a superb source of realities, desired outcomes and procedures.
Unethical stuff happens:
Toshiba were fined when it was discovered that inflamable batteries had been used in their laptops; Del Monte had to recall all the petfood that was discovered to have poisonous wheat gluten in the recipe and when, in 2007, Mattel were fined for toys they sold being contaminated with lead; the damage to their brand was devastating. After all, consumers would find it impossible to boycott the products of Yip Sing – the invisible supplier responsible for the paint job in the first place.
The media has covered a number of high profile supply chain exposures such as Primark. The discount retailer owned by Associated British Foods were discovered to be buying from suppliers who had subcontracted work to home workers who had employed children. A survey covered for Drapers after the June 2008 BBC Panorama programme that exposed this practice highlights that 44% of Primark customers were likely to switch to other retailers.
We are moving fast from a “trust me” to a “show me” world where business practice has to be open to scrutiny and this generates the need for better statistics and insight into the end-to-end process as a means to focus action needed.
We cannot ignore the reality on the ground where some of the actors have to deal with barriers to ethical decision making:
* Cost oriented Ethical and Environmental management. Decision makers see any regulations or best practice as being a prohibitive cost of doing business. For example, equitable rather than survival wages; safety procedures in the workplace or using forced or slave labour to deliver products to market and reach unrealistic price points. The responsibility here is to ensure that the benefits of ethical and sustainable business practice improves ROI and not the reverse.
* Crisis oriented Ethical and Environmental management: Actors play a wait-and-see game doing nothing until a crisis hits. Take the lack of preventive procedures in place all around the Indian Ocean prior to the Tsunami; a cavalier attitude to any process or service to a customer.
Much work has been done to develop Ethical approaches and prescriptions. The following is not an exhaustive list. Here goes:
1. Purpose: What are we seeking to achieve? Ethical considerations MUST not be seen as a cost to business but a means of levelling the playing field and, opening allcomers to global markets.
2. Triple bottom line expectations: John Elkington’s work on extending the spectrum of corporate values to People (Human Capital); Planet (Natural Capital) and, Profit should be developed to emphasise an ethical dimension – Corporate Social Responsibility. And then, with C3 – the challenge becomes to move byond one company to cross company CSR.
3. Mapping: Process. We need to understand the route to market from end-to end:
– Source to Consumer. This needs to be laid out from end-to-end. This resembles early history writing – what happened next. Then, comes the Hegelian twist – why? In my experience Archomai’s Kipling covers the ground best. Have a look!
– The Green Supply Chain. Professors Lenny Koh and Lynne Frostick are leading important work on Low Carbon futures. There can be no doubt that energy outcomes have an ethical dimension. Of this more later.
– Managing waste. This is an ever more crucial element to any supply chain. Given the skill with which the informal market deals with waste and recycling – it makes sense to explore more inclusive strategies from which Major Corporates may even learn!
– Reverse Logistics. Product recovery is big business and sets a challenging ethical agenda. Professor John Cullen’s work at the University of Sheffield highlights that up to 30% of products can be returned by customers with UK retail returns worth an estimated £5.75 billion. For example, internet clothing and footwear purchases that “don’t fit” as well as defective products. Managing these returns generates signficant costs through inventory and disposal. What happens when customers return a product to a company that sourced from a supply chain built on several tiers of supplier – each characterised by varying degrees of formality / informality.
– Security: We live in a world challenged by those who make it their business to dislocate, or destroy, other lives. Security needs to protect us but, if it is not integrated into end-to-end movements it will destroy business continuity and, with it ruin any chance of the small player reaching global markets. At worst, corrupt regimes use terror to their own cynical advantage. Security is not axiomatically an ethical consideration. It can only be so if administered with proportion and fairness to all.
– Ethical behaviours: This is where ethical considerations need to explore relationships at every point along the chain of events. For example: Buyer and Seller; Provider and User. Years ago, I worked in Sweden and marvelled at the coherence of the work of Jan Carllson at Airline SAS. Rooting out shoddy performance he concentrated on every moment of contact between customer and SAS. each “event” or “contact” was monitored closely and best outcome sought. T L suggests an Ethical approach inspired by this idea.
– Ethical consistency: Corporate Social Responsibility has become, for some, a brand imperative triggered less by ethical considerations and more by pragmatism. In any case a single company initiative is rarely enough to sustain ethical behaviours. The C3 approach recognises the need to explore ways to sustain CSR between companies. See Post.
4. Security. This could be an unlikley source of impetus as US and EU regulations force stringent cargo security procedures on ALL Ports – without exception. These measures will force greater transparency in the supply chain facilitating many of the above Ethical Considerations.
5. Back to an Ethical campaign. From the tectonic four-hour speech given to the House of Commons by William Wilberforce on 12 May 1789 to the imaginative and remorseless campaign that it triggered and the legislative victories it achieved the Anti Slavery Movement has much to offer a drive to deliver ethical and inclusive movement of goods and services to market.
In recent years, many companies such as Lehman Brothers; JP Morgan, New York Life, Freshfields and Rothschilds have admitted involvement in the Atlantic Slave Trade. As Niall Ferguson of Harvard University has emphasised: “slavery was pervasive in the structure of British wealth in 1830″. The campaign and, public opinion were instrumental in undermining an industry built on slavery and, the same momentum can be built in relation to Ethical Supply Chains.
Recently, Professor David Richardson of the University of Hull’s WISE (Wilberforce Institute for the Study of Slavery & Emancipation) and Dr Joel Quirk led a fascinating Conference bringing together historical slavery and modern forms of human bondage. Take this further and there are clear insights that can assist an understanding of ethical supply chain issues. Here are three thoughts drawn from the literature on slavery.
Kevin Bales work on Contemporary Slavery is an inspiration. In Understanding Global Slavery ((2005) he highlights the big shift in the nature of political action over the last fifty years; away from established political parties to nonstate, issue-based campaigning groups, and away from nation state politics to global politics. In terms of the ethical supply chain this perspective allows us to explore the real challenge of the legal polarities between the formal and informal market. Conventional governments are not sympathetic to those who don’t on land and pay taxes. Does this place the majority world beyond the pale of ethical consideration?
Joel Quirk’s recent book Unfinished Business (UNESCO 2009) surveys historical and contemporary slavery. For me, his conclusions contain a chilling observation on release, rehabilitation and restitution that extend into thoughts on the ethical supply chain. He writes: “Historically, escape from slavery has been confined to release with slaves receiving little assistance beyond a formal change in legal status”; and then, the challenge. He continues: “When slaves do come to official notice, they regularily end up being detained, returned, deported or hastily discharged, with little or no concern for their overall welfare of past history.”
For example, where there have been instances of the use of child labour; the test for an ethical supply chain is not so much that the company stamps it out but whether ethical sourcing creates an environment within which the supply chain and producers that will support an equitable and sustainable industry. Close down a factory full of children and you may close down a village with disastrous consequences. More needs to be done to ensure that this is not perpetuated. This is ethical sustainability.
This perspective raises the caveat of Hernando de Soto when championing the value of the informal market – the issue of legal title. In his various books, de Soto highlights the problem of the Majority World and those who live in favelhas or slums. They do not own their land. Simply put – this means that no enterprise can raise funds from conventional banking and, this consigns them to the margins of society. However, even if they could afford to buy the property the arthritic and too often corrupt Legal system renders any transaction slow and opaque. A reform of the Legal system is as long overdue as that of the Banks. I make the point but wil have to develop it later.
Finally, the Anti-Slavery Movement taught the world some significant lessons on the strategies of protest and, the mechanics of campaigning in the modern world. Mobilising with the use of pamplets; engineering Corporate endorsement – Wedgwoods famous tableware with Anti Slavery themes – and, the ability to mobilise support around an issue beyond self interest.
Article by: Rob Bell, Transformational Logistics Blog