If you source products from foreign factories you have probably been performing quality audits for a while. This helps you guarantee your expected quality level. Not only does it making perfect economical sense but it is also a legal and social responsibility towards your customers. Following social movements, this responsibility slowly expanded from quality to environmental and social concerns along the supply chain. The recent multiplication of the regulations in both importing and producing countries represents an immediate call-to-action for the brands. But they are sometimes not prepared. So where to start?
Set the rules for your suppliers
The very first step for your brand is to define what will be the standards, or code of conduct, you communicate to your suppliers. Of course regulatory standards on environmental and social problems already exist, however they are uneven throughout the world. Volunteer industry standards also do exist in most cases but they can be numerous and contradictory. So several points have to be considered: do you pick an existing standard or do you develop your own? Do you develop a worldwide or a local policy? There is no perfect answer to that. You mostly need to consider the risks, your internal values and your customer’s expectations. As this is the base to later on assess your suppliers it is important to conduct it thoughtfully which might require the help of an external facilitator. You then need to define what are the critical points and the acceptable levels of compliance.
Get the commitments of your suppliers
Once you have defined the rules you expect your suppliers to adhere to, you need to communicate with them clearly. You can start by listing all the factories you collaborate with as well as their processes and location. Getting details about the process is important for two main reasons: firstly, knowing which suppliers represent higher risks in term of environmental and social concerns then secondly identifying the level of processing. Namely if they are just assembling it will be necessary to come back to the previous link of the supply chain. Once all the suppliers are identified you can ask them to commit in writing on following the rules. Sometimes however, commitment is not enough and you are responsible to check if this matches the reality of the production situation.
Evaluate the compliance of your suppliers
This is where the audit process comes in. Here again you have multiple options: do I audit all my suppliers at once? At which level of the chain do I stop? Do I audit internally or do I use a third party? Let’s face it, this depends on your resources and the complexity of your supply chain. If you have limited resources you will have to adopt a risk base approach to select the suppliers to audit in priority. It is widely accepted to start auditing the suppliers with the biggest contribution first. However is it the best approach? What has occurred in recent scandals, is that as soon as a brand is associated with social issues, whatever the volume of products produced, this can be utterly detrimental for a company’s reputation. So one might need to consider other risks such as: the sensitivity of the process, the country of production, etc. To assess such risks,the help of a local expert can be particularly useful.
Deal with the audit results
The analysis of audits results is the reason some brands get cold feet. This can even result in them not even starting audit campaigns. Indeed, what should I do if I discover breaches at my main supplier’s factory? This is why defining the rules from the very beginning is that important, you might consider some points or situations that are more critical than others according to your own standards. Based on this, you can define either you stop working with the supplier or ask for improvements. If you have multiple suppliers the process can be seen as an opportunity to rationalize the number of suppliers and create real partnership for improvements. At the end what matters the most sustain and develop your brand is the reliability and resilience of your own supply chain.
At Responsabilitas, we developed environmental auditing rules or checklists for China. These checklists help you to reduce the risk on environmental compliance in your supply chain as well as establishing a baseline for progress on environmental performance. Please contact us if you need more information: