Ask the Expert - Ethical Sourcing

In this surgery the technical experts explained how to formulate selection criteria and sourcing strategies to ensure that the organisation will make the correct choice of external suppliers. Also looking at the options for sourcing, and to ensure the development of ethically and socially responsible sourcing agreements.

Ask the Expert Ethical Sourcing Q&A

Q 1 – What are some of the risks of Ethical Sourcing?

A – When assessing any type of risk, organisations look at their internal and external environment. From there they create their risk register. Ethical Sourcing is no different. We would recommend mapping the impact of an Ethical Sourcing strategy on the internal and external environment of your organisation. This lets you identify the ethical risks when sourcing, and the risks exposure for your organisation.

Some of the risks faced when sourcing ethically:

• Reputational: Ongoing poor publicity for associating with/'condoning' poor ethical practice. Not sourcing ethically can cause scandals e.g. clothes retailers with child labour. During the COVID-19, many governments delivered face masks that were of poor workmanship or too expensive, causing reputational damages for some health organizations.
• Economic: Abnormally low costs when trying to buy goods at best value for money can be risky. It is important to ensure your organisation is not working with unethical suppliers. You should check that suppliers are offering working conditions to their employees and workers that are according to their national legislation and complying with international labour standards e.g the International Labour Organisation standards. Price is not necessarily the main driver when sourcing ethically. Ensure you are paying a fair price and that suppliers don't have to cut ethical corners to make business worthwhile.
• Operational: Disaffected workforce may provide poor quality goods or services, or fail to hit stretch delivery targets due to poor working conditions. Monitoring quality levels of your suppliers is key.
• Political: The country of origin of your suppliers can cause delivery issues at the country of destination. Some countries are refusing entry of the goods at custom when the goods are manufactured in a country with whom it does not have good diplomatic ties. Some source countries could be sponsoring rebels through money laundering or economic activities camouflaged as legitimate business yet production of goods and services from those activities are unethical.
• Social: Modern Day Slavery can include situations where a person is forced to work for free to pay off a debt, or child slavery, forced labour, where victims are made to work through violence and intimidation. Use your expertise on monitoring business supply chains and find out if your company complies with current anti-slavery legislation.This may be true for manufacturers of health products too.

We highly encourage you to:

• Participate in the CIPS Sustainability Index, which will help identify any potential risks in this area.
• Take the CIPS Ethics Test - it includes over two hours of E-learning resources and is designed to help procurement and supply chain professionals all over the world to demonstrate their absolute commitment to, and understanding of, acting ethically on behalf of their organisations.

Q 2 – How can Ethical Sourcing assist in reducing the effects of the Covid – 19 Pandemic?

A – During this pandemic some suppliers have taken advantage of inflating prices of PPEs in cahoots with unethical buyers. A reduction in such behaviour will lead to a reduction in the cost of the PPEs and make them more accessible to the frontline health workers and ordinary citizens. This will improve prevention and exposure levels.

• Some health products are biohazard in nature and must come with disposal instructions from the suppliers. However, for PPEs the procurement officers must ensure that the standards of quality are high and safe for use so that they do not expose the users, both health workers and general populations to infections. Since demand has outstripped supply some organizations whose core competence is not in production of such equipment have diverted their effort to produce them and are likely to use cheap or forced overtime labour to meet the demand. Already we have complaints from countries like Kenya of sub-standard PPEs which have exposed the users to corona virus infection. Unfortunately, they were traced to countries like China which are known for using cheap labour.
• There have been reports in countries like Kenya where PPEs meant for local use have been diverted and sold to other neighbouring countries such as Tanzania thus denying the intended local beneficiaries an opportunity to protect themselves. Buyers in such countries must be able evaluate the sources of their supplies.
• Anti-bribery laws, Anti-fraud and Anti-Corruption policies in place help reduce the cost and product diversion and thus enhance the fight against the pandemic.

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