Supplier Compliance and Social Responsibility - Look Deep Into Your Supply Chain

The Guardian has run a great piece in their paper titled "Vauxhall and BMW among Car Firms Linked to Child Labour Over Glittery Mica Paint".  This article shows the results of the paper's investigation into illegal mica mines in India and the use of child labor.  Not the type of headline your company wants to have. I will summarize the impact on supply chains but you should read the full article at the Guardian website.  It is a bit troubling that major companies are still claiming ignorance on issues such as this.

Of course this has huge implications for supply chains.  How do you get the materials you need from thousands of suppliers and still maintain control over the way the materials are extracted and handled. This is especially important when it relates to raw materials mined from the earth.  So often, these materials are mined in 3d world counties with no standards on safety or child labor.  The cosmetics and car industries are learning a lot right now.

If you are responsible for any type of procurement in your supply chain and you are not actively and aggressively working with all your suppliers (Walk the "tiers" all the way back to the raw material extraction) then you are putting your company's brand and reputation in grave danger.  Remember, Brand Value is only made up in trust.  Trust can disappear over night.  When the first thing a company says to the press after a story like this comes out is "We don't discuss supplier relations with the press" (like PPG initially did), you know they have been caught off guard.  Either they had no program or it was woefully inadequate and now they are scrambling to find out what the heck is going on.

Picture from The Guardian

Some thoughts on what you should be doing:

1. Prioritize Social Responsibility and Responsible Sourcing Strategies by appointing a "C" level executive as the program sponsor.
   
2. If a price for an item or for materials is "too good to be true" then it probably is and you should investigate.
   
3. Have a no tolerance policy.  No "slaps on the wrist" but rather eradicate from your portfolio any supplier who is non compliant.
   
4. Have "boots on the ground" in all countries where you have significant presence.  If you know the "sparkle in the paint" comes from mica in India and you know it is mined - you need to be there.  Someone needs to go and inspect (It always amazes me how these newspapers can find it with no problem but the key executives will say 'I had no idea.. '.

Finally, as consumers, we need to continue to ask and probe before we buy.  Before you buy that sparkling new car with the beautiful metallic paint, do a little research.  You may find out your beautiful car is a product of a 7 year old with a pick axe breathing toxic materials and being sentenced to a life of what is essentially slavery.  

Why You, The Logistics and Supply Chain Manager, Need to OWN Your Sustainability Program

Many companies have sustainability offices or offices for Corporate Social Responsibility (CSR) and because of this many logistics and supply chain managers acquiesce their obligation to sustainability to these offices.  The offices do not have the staff to really do the job at the execution level (they are great at setting high level goals and making press releases) and therefore much of a company's sustainability program is thrown over the wall to external "validating" agencies.

Looks like a good strategy right?  After all, if you can say you are working with LEED or Smartway isn't that enough?  Well the answer turns out to be no and the supply chain manager who does this does it at her own potential peril.

In a recent article the New Republic highlighted an example of this as it relates to LEED certification of the Bank of America building in New York.  In this case, the investigative journalist found the building, while certified when it was empty, in practice is not very "green" at all.  Read:  In the EXECUTION of the sustainability program, it failed miserably.

Also notice the headline had Bank of America prominently displayed.  The brand under attack in the headline was not the LEED brand (although deep in the article it did not fair well) but it was the actual company brand. This is important because one of the critical success factors of all sustainability programs at the execution level is brand protection. Imagine this scenario:

1. Your CEO is out on the speaking circuit touting the sustainability and social responsibility of your company.  Indeed, she is making this a cornerstone of why consumers should deal with your product. 
2. You feel like you are doing your job because your distribution centers are LEED certified and you at least ask your carriers if they are in the Smartway program. 
3. Someone now takes an inventory of what is really happening and they find out many of these "certifications" are so general in nature that they cannot be used to determine anything.  A true and real inventory shows not much progress in truly reducing greenhouse gas emissions.
4. An aggressive reporter or investator starts questioning your CEO about this - she looks perplexed

At that point the brand damage is done.  All you are doing is playing catch-up to the damage and hoping time and some counter communication will work.  You can find yourself with a real problem at this point.  

Here are some recommendations to ensure this does not happen to you or to your company (and of course to your CEO):

1. Take Ownership of Your Supply Chain Sustainability Program - The corporate office sets targets and high level goals and may be the location you send reports to but you must own the supply chain performance of this.  Not some other office in your company and not some external agency. 
2. Employ external expertise as needed - This may sound contradictory but it is not.  When I say use this external expertise I mean to actually dive in and inventory.  This external agency should have no vested interest in the outcome beyond inventorying your GhG emissions, consulting with you on programs to reduce, developing road-maps and re-inventorying.  They have a fiduciary responsibility only to you.
3. Put goals and targets on performance appraisals with equal weight to other items - This is not and either/or as it relates to a sustainability program v. financial performance - it is a both.  You must evaluate people on the actual performance of the program or they will only see it as a sideshow. Sideshows lead to results shown above. 
4. When conducting your inventory do it at a very detailed level - There are a lot of generic databases out in the public domain which say, essentially, "on average" this is what the emissions are for a company doing what you do.  However, a lot of people have drowned in streams that "average" 3 feet deep.  You must inventory at the truck, fleet and fuel level.  Real consumption data for energy is a must.  The higher you generalize the more likely it is your CEO will be surprised one day. 

If you do not take ownership of your supply chain sustainability program with the same vigor and thoughtfulness you put against financial performance I can assure you someone else will... and that will not be the best day of your life.  

If you still do not believe me think about how your company deals with safety.  If someone asked you who is responsible for safety in your company would you really respond, "The safety office"?  I think that makes my point.  

Carbon Offsets Should Be Part of a Sustainability Program

When I talk sustainability, either individually or in groups, the same consistent theme comes from middle management:  We will do it if it also makes economic sense (i.e., immediate payback) but we will not do it if it "costs" us.  Very few companies and people today will execute sustainability projects purely because it is the "right" thing to do.

The problem with this however is that it is tough, if not impossible, for the free economic market to put a true cost on environmental issues.  The "cost" is down the road and the "benefit" of destroying the environment is now and that leads to distorted ideas and distorted business decisions.  I heard a person say a the Alternative Clean Transportation (ACT) conference this week that our minds would adjust if we thought:

"Rather than thinking we inherited the earth from our parents, we should think like we are borrowing it from our children."

When you think about borrowing the earth you think about what state it will be when you leave it regardless of whether there is a cost now.  And that leads you to build out a very detailed sustainability practice regardless of the immediate payback.  And this leads us to this great post about carbon offsets.

Yes, as Marc Gunther mentions, carbon offsets are so 2007.  Essentially the idea was you would either voluntarily or involuntarily (through mandatory carbon offset markets) buy into offset projects to help mitigate the long term damage any action you take may have on the long term of the environment.  This led to the EU carbon markets and now the California Carbon Exchange.  The problem right now is the price of a ton of carbon is far too low.

Some point to the fraud which naturally was part of these markets as proof they did not work - kind of like saying because people get murdered in Chicago it is proof the laws against murder are not good for society.  This is a ridiculous argument.  The fact there is fraud says more about the general business community than it does about the markets.

In the end, to build a true sustainability program you have to invest beyond the hear and now from an immediate business case, you have to acknowledge the markets do not properly price issues like carbon emissions, global warming, rise of sea levels etc. etc., and you have to be willing to do something about it.  I am not saying you have to bankrupt your company in the defense of the environment but I am saying you have to realize that the market does not price 400ppm of carbon in the atmosphere properly. The carbon which brought us to 400ppm was catastrophic (see where some say 350ppm was the tipping point) and the marginal cost should have been astronomical. But, alas, it was not; it was essentially free.  That is a market which is not working properly.

Sustainability is Good Business - Global Companies Sign on To A Climate Declaration

Be careful if you think demanding action for climate change is just the purview of the crazies; many Fortune 100 companies are taking this very seriously.  Sustainable Brands reported 33 large multinational companies have signed on to a declaration asking for a coordinated action with Washington on making a positive impact on the climate.  The graphic below shows the companies who have signed on:

At this site (www.climatedeclaration.us) you can also sign on as an individual.  It does not say certain things have to be done but it is an acknowledgement that climate change is real, there are things we can do to stop or slow it and that it is a worthy cause for companies to engage in. Companies can "do good while doing good things". 

See the announcement:

Supply Chain and Sustainability

Greenbiz and Supply Chain Insights conduct a survey on the different thoughts of supply chain organizations and sustainability organizations in a company.  This is very telling since I truly believe sustainability should be embedded in the operations of Supply Chain.  One certain way for sustainability to fail is for a company to believe it is the job of some "office" in corporate headquarters.

The chart to the left shows how disconnected the two are in many areas including supplier training and 3rd party audits.  While I think the audits are very good and should be used I find it very insightful to see that the sustainability offices believe industry consortium's are of more value than the supply chain individuals.

All of this has many facets to it and can be argued one or the other however the key message here is the two groups, sometimes within the same company are not aligned as to a strategy on how to execute against sustainability goals   When this alignment fails to occur you can almost be assured the goals themselves are in jeopardy.

Sustainability must be embedded in the 5 key areas of supply chain:

1. Extraction / procurement
2. Conversion
3. Distribution
4. Use
5. Disposal

If the operators of each of these areas are just going about their business and expecting a message from "on high" to tell them what to do I believe they are mistaken.  In each case, the operators must execute within the context  of the overall sustainability goals of a company.  This, of course, does not just mean carbon reduction but includes:

1. Fair trade type practices (not allowing child labor, bad work conditions, conflict minerals etc.)
2. Zero waste
3. Replace (if you have to extract, how do you replace to make a greener environment)
4. Reduction of all green house gases
5. Design of product so the use of the product will be sustainable
6. Renewable energy
7. Re-usable packaging and product

Of course there are a lot more and I just wanted to show that this cannot be done waiting on an expert.  Each and over operator must embed these ideas into their operation.  

Blue and Brown Make Green... Sustainability for The Final Mile

I have written before about the complexity of the final mile in the logistics network.  This includes both the final mile of the delivery and also the first mile of the reverse logistics networks created by final mile deliveries (i.e., Customers tend to order one size too big, one too small knowing they can return.. for example).   What I had not thought about was the unique nature of the sustainability challenges of the final mile network.

Thank goodness there are a lot smarter people than me in this world!

The Post Office (USPS) and United Parcel Service (UPS) have partnered together to share information and build out this carbon information for the final mile in the United States.  This is good news and I look forward to seeing more about this in the coming years.  The sheer volume of vehicles possessed by both of these entities and the fact they are working to reduce carbon gives me hope for continued sustainability initiatives.

Where Reverse Logistics and Sustainability Meet

We all know the technical reasons for reverse logistics and at this point in the season many retailers loathe it.  Product is returned, packaging is just thrown into landfills and old product is thrown in the garbage in favor of the new and fancier version.  This is both a reverse logistics and a sustainability nightmare.

What is worse is a lot of the garbage created ends up in the ocean.  There are floating patches of man made waste all over the ocean and it just sits out there generally making a mess of things.

Well, fret no more as one of the most forward thinking and sustainable companies on the planet, Method, has come to the rescue.  According to both their website and this article in the Mother Nature Network Method has devised a way to take that post consumer use ocean garbage and re-purpose it to make the bottles for their 2 in 1 hand soap / dish wash soap.  What a great idea.  by using this product you will accomplish three things:

• Get a great soap (Yes, I use Method and love it)
• Help to clean the oceans
• Eliminate waste in the creation of new plastic bottles which are unneeded since we as humans have provided patches of the old stuff ready for use. 

It is very rare you can accomplish all of this in one purchase. Yes, recycling what we throw away is part of reverse logistics. 

What are you doing for your personal sustainability initiative today?

Cap and Trade Has Come To Be in California

Consider it a birthday of sorts.  Yesterday, California launched their first "Cap and Trade" market by auctioning off allowances in the California Carbon market.  This, while just being California, actually becomes the world's second largest carbon market right behind all of the European Union.

While right now it essentially only applies to major refineries and electric plants the day is coming when it will apply to transportation fuels.  My personal recommendation is the industry should get prepared to deal with this inevitability rather than fight it.  Politics aside, what we have found is what generally starts with the California Air Resource Board (CARB) moves across the Nation fairly quickly.

The Wall Street Journal reports on this launching and reports California expects to raise $1bl in 2012 and $2.8 to $11bl by 2015.  A critical factor for success is we have to ensure this money goes to actually reducing emissions or offset projects rather than the general coffers of the state.  If we can avoid the "money grab" then this will be a very effective way to use market incentives to lower emissions.

 According the the California auction site, the results will be listed on November 19, 2012. Auction information can be found at the CARB auction site.

EU Freezes Carbon Charge on Airlines

Many know the EU was going to charge a carbon emissions charge on any airline flying in the EU airspace - this included foreign airlines.  Of course, this caused a furor in international relations and the US actually passed legislation (prior to the election) preventing US flagged air carriers from implementing this charge.

Now, the EU has agreed to "freeze" this for a year.  This is an interesting development and one which I am sure is designed to bring "peace".  I am just not sure what they are waiting on?  What will really be different next year than this year?

U.S. Overtakes Saudi Arabia in Oil Production by 2030 - IEA

This is a fascinating statement and it shows how disruptive technology (i.e, the ability to extract tight oil and shale oil / gas) will really turn the world energy markets on their head.  The International Energy Agency (IEA) has two reports out.  The first (as reported by Bloomberg) describes how the US will overtake Saudi Arabia in oil production.  Some interesting statistics:

• Last Month Saudi Arabia pumped 9.8 million barrels per day; The US 6.7 million - very close. 
• US production this year will be highest since 1991.
• 83% of the US domestic oil needs were met with domestic oil supplies in the first 6 months of 2012. 

The second report (again as reported by Bloomberg) tells us by 2030 natural gas will be the predominant source of energy in the United States as it will be plentiful and cheap.  Both of these are incredible developments given just a few years ago people were talking about "Peak Oil".

I will add a bit of commentary on sustainable practices.  I hope we as a country are wise enough to see these developments as incredible luck which gives us time to move to a more sustainable way to power our economy.  If we use this as a way to get "cheap energy": which then makes the business case for sustainable energy not economically viable then we will have squandered a huge opportunity.  

Also, as I have stated before, do not confuse "energy independence" with "cheap oil".  The oil prices will almost always be at world levels because if they are not then the energy will simply be exported rather than consumed in the US. 

The impact on transportation will be clear:

• Oil supplies abundant
• Oil prices at world levels (i.e., no "cheap oil")
• Movement to natural gas will continue. 

Cap and Trade Launches in California

It is finally here in the United States with California launching their carbon market on November 14th.  On November 14th, California Air Resource Board (CARB) will launch the selling of 21.8 million carbon allowances to be bought by stationary carbon emitters (plants, utilities etc.).  Distributors of transportation fuels and natural gas will come in 2015.  

This offset mechanism is supposed to have the desired effect of putting a market mechanism in place which will allow rules of economics to force companies to either lower their carbon emissions or pay a price.  Presumably, the price will get high enough where there can be business cases made to implement new technologies or new conservation programs which will drive down the emission of green house gases.  The ultimate goal is to get CO2 down to 1990 levels even with presumed growth of the economy.  

To give an idea of the pricing mechanism below is a graph from Point Carbon which reflects the prices, per metric tonne, of CO2 allowances currently trading in the very illiquid California market. 

Source: Point Carbon

You can see the carbon allowances are trading on the low end of the scale.  The point of injecting the allowances by the state is to give a shot of liquidity to the market to get the market functioning better.  Best estimates are they will sell for between $10 - $12 per metric tonne and we will see on November 14th how it all pans out. 

This mechanism is similar to the European market already in place and this will make the California market the 2d largest market in the world. 

Like it or not, I think the evidence is clear:  1) CO2 is causing climate change. 2) Human activity is producing excess CO2 3) We must reduce CO2.   Given all of this using rules of economics to create a market which "prices" bad environmental behavior is the right way to go.  People will either have to pay the price and continue the bad behavior (that money would be used by others to clean up after the bad behavior person) or they will use the economics to create business cases to create projects to fix / lower their carbon emissions.  

The issue here of course is anytime the government creates a "currency" out of thin air their is huge opportunity for abuse.  However, there are mechanisms to solve that abuse potential, or at least make it not in their best interest to execute the potential corruption, and those mechanisms should be researched, implemented then fine tuned before we decide to end what will be a great program. 

Of course, this will come with the obligatory law suits on both sides so we will wait and see how this all turns out.  Bottom Line: If you are a transportation provider or transportation user you should watch this closely because in 2015 it will impact your business.  You will be participating either directly or indirectly. 

Good Discussion of Unilever Sustainable Living Plan

I found this a very enlightening and exciting presentation relative to the Unilever Sustainable Living Plan.  Clearly they have a plan and are executing against it.

Continuing on Cube Utilization - Secondary Cube

What if Watermelons were Square?

Ask yourself - What if Watermelons Were Square?

I find just about everyone gets the idea that putting more stuff in a trailer will generally reduce your overall costs because you will use less trailers.  It is that simple.  Miles per unit sold goes down and with that the cost of transportation.  Further, your sustainability goals are met far quicker because less miles means less emissions.  The easiest way to reduce the cost of anything is just to stop using it.  Concentrating on cube utilization accomplishes this.

However, for all the people who know this I find a lot less worry about secondary cube or what some call "liquid cube".  This actually takes into account the utilization of the cartons or packaging of product you are loading in the truck.  Think of it this way:  You may load 1,000 cases of xyz product into your trailer, look at it, and say "wow, did I cube out that trailer"!  What you may miss though is the cube utilization of the cases is horrible.  Open the cases and you may find a lot of air due to bottles being curved, sizing relative to the case not done properly, or just packaging which is too big for its contents.  If you are able to solve that problem (per my previous post, most likely with the marketing and merchandising folks) you may find you can put a lot more product in that same trailer.

So, the journey continues... Once you think you have cubed the trailer, start looking at secondary cube and start solving that problem.  Keep packing them tight and ELIMINATE emissions and cost; don't just reduce it.

(Answer to above question:  A lot more would fit in a trailer - after all, the rind is merely nature's packaging!)

Natural Gas - A Different View

One of my colleagues sent me a very interesting post which was the opening statement of David L. Greene, Oak Ridge National Laboratory to a committee looking into the uses of Natural Gas.  While I am a big supporter of natural gas in transportation I think it is always good to get a balanced view to any topic.  I have a saying I live by: "Nothing is ever as good as it seems and nothing is ever as bad as it seems".  This is almost always true when there is a "gold rush" into anything.  It was true of the Internet boom in the late '90s, turned out to be true in a devastating way with real estate and now, most likely, it is true in the natural gas boom.  Here are a couple of points:

• Those who think NATGAS will remain wildly below the world price just because it is drilled here in the US may need a lesson in global economics.  Fuel / Oil is a very fungible commodity and because gas can be liquefied it can and will be exported if there is an arbitrage opportunity. 

• In order to keep up with emissions requirements and total GHG reductions, the entire infrastructure (if built) for NATGAS would need to be dismantled by 2050.  I cannot vouch for the accuracy of this statement however it is right in line with what I have heard before which is NATGAS is somewhat of a "bridge" fuel.  It does not satisfy our overall objective to get to sustainable fuels and renewable energy.  But, and this is a big but, how long / far will the "bridge" be?  If you assume 2050 as this article does then it probably does not make sense to build it.  However, if you assume longer then it should be built.  This requires forecasting, a crystal ball and a bit of luck.  None of which I can do very well or possess. 

• The differences in energy in NATGAS v. Diesel means a wholesale transition is highly doubtful.

The conclusions of the article are right in line with what I have been advocating all along:  Conversion to alternative fuels, such as NATGAS, are engineering questions and should be dealt with in this fashion.  A shipper needs to identify specific locations, specific applications and then decide type of fuel, truck etc. etc.  

The future is going to be highly complex as there will not be a "one size fits all".  Unfortunately, that takes 10X Thinking and we, as a species, tend to see the future through a rear view mirror.  We want a new fuel source to replicate the structures of oil and that, I can forecast for sure, will not happen. 

The EPA May Have Got it Right

For the last 4 - 6 years we have heard many people grumbling about the need to clean up diesel trucks from an environmental  perspective.  All the same arguments heard whenever new goals are set were rolled out:  "It will cost a fortune", "It will never work", "The technology doesn't exist"... etc. etc.  Same comments made by the automotive companies when the initial clean air act was passed and now we hear them again when it comes to Natural Gas. Now, in an article entitled, The Emissions Dividend in Fleet Owner Magazine, we find out the EPA may have been right.  Thank goodness they stuck to their guns.

What is even more fascinating about the data in the article is it seems to suggest now that all these changes may actually end up in reduced costs for the carriers.  Engines are lasting a million miles, drain intervals are being extended  and other operating costs are improving.  Yes, the acquisition costs of the engines may be higher but it appears there is evidence the total cost of ownership (Generally figured by adding: Acquisition costs+ownership cost-residual revenue) may actually be lower.  It is certainly improving and this is verified by a presentation I was at where a very large trucking company confirmed this phenomenon.

As a shipper it has to make you wonder what all this talk is of "increased costs"?  Yes, there are increased acquisition costs but it is TCO I am concerned about.  If TCO is decreasing that is a good thing isn't it.

This reinforces why, as a shipper, you have to understand the costing model of transportation as well or better than anyone in the industry.

Could you imagine what LA would be like from a smog perspective if the EPA had not stuck to its guns all these years?  It would have been a disaster.  Now, it looks like the same success is coming to the actions concerning diesel trucking.  Congratulations EPA... and my future grandchildren thank you.

Sustainability - Why Not?

I had an interesting revelation today as I drove my hybrid to work. Many people will rationalize why they are not living a sustainable life - leaving a better planet to their heirs than they gained from their parents.  They will go through the "personal business case", they will try to deny the science of the changing planet or, some, will hold onto a belief that it is our God given right to do whatever we want to the planet.

Of course, all of those are what we call excuses and rationalizations.  My observation is many who do not care about sustainability are the exact people who can afford it and are benefited by it.

So, next time you rationalize your unsustainable behavior ask yourself, why not?  Why not take the few extra minutes to recycle?  Why not spend an extra $1K to get a sustainable automobile?  Why not buy local so things don't have to be transported so far.. etc. etc.

The key question for all of us:  Why Not?

Are You Truly Dedicated to Sustainability?

This is a question I ponder all the time. While I am thrilled when people do anything to help the planet, regardless of motives, I do wonder what would happen if people really were dedicated to this important initiative.  While we all know the "big things" to do (i.e., alternative fuels, recycle, etc.) I wonder how much impact we could make if we all just did some of the small things.  So here are just a few things you can do starting TODAY to make the planet a better place:

1.  Regardless of the type of vehicle you own, drive the speed limit.  Reduces emissions and saves gas.  Nothing infuriates me more than to see a hybrid drive driving 80 - 90 miles an hour.

2. Recycle, recycle, recycle.. Including composting

3. Buy less stuff.. Everything you buy comes to you on a truck, using fuel and will eventually have to be disposed of.  Less stuff means less of all that.

4.  Go on a diet and eat locally grown items.  This is an amazing task which is great for everyone.  You will be healthier (I know, I am one to talk but I have lost a lot of weight and will continue!), less food will need to be grown, and less trucks needed to drive all that food around if you buy locally.

Here is a small example:  We are spreading mulch to make our garden better and hopefully return oxygen to the environment.  We needed to put down weed blocker and rather than go buy it, we used old newspaper to do this.  It got rid of waste, we saved money and it eliminated the need for the weed blocker which means one less roll needed to be shipped.  If everyone did this and we reduced the need by thousands (Sorry if you are in the weed blocker industry) then we could actually take trucks off the road, reduce emissions and reduce the need for diesel fuel.

Here are some other ideas from The Wall Street Journal.

This is the way we can all contribute on a small level as we all work hard to make big changes as well.

Just a thought...

Happy Earth Day!!

Sustainability - It is About A Complete and Holistic Strategy

I am somewhat fascinated when I discuss sustainable supply chains with people.  I usually either get an "all or nothing" answer, an answer which is tied to a pet project, or the occasional "sustainability does not matter" answer (thankfully those people now are few and far between).

The clear proposal is good sustainable supply chain programs have to encompass a holistic view involving everything from how products are designed and packaged, how they are shipped, the type of fuel used when shipped and how the product is recovered at the end of life.  You cannot have a true sustainability program without looking at at least all the attributes listed above (they are not all inclusive).

So, the next time you address this topic make sure the "all or nothing" group does not rule the conversation.  Break the problem down into small pieces and attack each one.  This is your best solution.

Penn Wells Considered Safe by EPA - Fracking Politics

The politics around fracking, the way we are getting natural gas out of the ground, has been somewhat unbearable.  Here is the first time I have read good "science" behind the argument and it looks like the politics were much ado about hype than anything.

Keep an eye on this.  Natural Gas is the way our Country will get off our addiction to foreign oil.  I fully support a strict and detailed EPA enforcement to ensure we do not fix one problem and cause another.  However, I want to also ensure we use science and not politics to solve the problem.

The Case for Sustainable and Ethical Supply Chains

For most of my readers it will not come as a surprise I am a bit of liberal when it comes to ownership for the sustainability of your supply chain.  It is just a fact that companies must take ownership of this and your customers, more and more, are becoming "sustainable aware" of what it takes to get them your product.  Further, they are going to punish you for not caring for the environment.

But, what about ethics?  This is the next area and it is more difficult as it is harder to measure.  We know slavery is wrong and we know if we see great working conditions that is good.  However, what about in between?  Does $2 per day seem unethical even though when you account for purchase power parity it may not be too bad?  This is the dangerous area and precisely why companies have to take control of their entire supply chain and ensure there is nothing which can even be perceived as being unethical or immoral in how things are made, how people are treated and how the Earth is treated.

This article in Forbes on Sustainable and Ethical Supply Chains sums it up well.  Two big examples of problems and then fixes.  Nike in the '90s had real issues with this and Apple does today.  Both moved and are moving aggressively to tray to stop the unethical behavior and both have brand names that allow them a bit of latitude.  Bottom line:  They have provided so much value to the customer that the customer will forgive a transgression as long as they actively fix it and fix it fast.

The key question for you is whether your brand is that strong?  Most are not.  Most will be dead on arrival if they are seen to be exploiting people or the environment for financial gain.

The bottom line:  Take control of your supply chain, have a good code of conduct, demand compliance and put in strict audit systems to ensure compliance is occurring.  Trust but verify is the name of the game.

Don't let your zeal to jump on the outsourcing bandwagon cause you to put your brand and your entire company's future in jeopardy.