Manage Your Supply Chain, Or It Might Manage You

Managing a supply chain that spans the globe has never been easy. It's so complicated, in fact, that many manufacturers simply throw up their hands -- as long as the product showed up when and where and how it was supposed to, what more could one do?

But in the Internet age, things are different.

Many of your customers want to know whether your jeans were made in a sweatshop factory where workers might burn to death because exits have been blocked, or whether that rug was knotted by children's hands, or whether the tanzanite stone in a beautiful ring was exchanged for illegal guns that will fuel a brutal regime and its equally brutal opponents.

And they expect you to be able to answer their questions.

Sometimes it will be the final retail consumer who will demand to know; sometimes it will be your wholesale customer.

Today, it's Whole Foods, which will remove Hershey's high-end chocolate brand, Scharffen Berger, from all store shelves by the end of the year "due to Hershey’s failure to assure that the cocoa is sourced without the use of forced child labor," according to a story off the CSR Newswire (full release, here). Whole Foods' action came as the result of "more than 15,000 customers demanding that ... Hershey [be held] accountable for exploiting children for profit."

The CSRWire report notes that, according to "a U.S. government-funded study, over 1.8 million children work in West Africa’s cocoa industry. Many of these children are exposed to dangerous working conditions and some are even trafficked and sold off to perform grueling labor."

Several major chocolate makers, including Mars and Ferraro, have committed to the ethical sourcing of chocolate, but Hershey's has, to date, refused.

This small news story may have struck me particularly forcefully because I've just finished reading The Responsible Company, by Yvon Chouinard (owner / founder of Patagonia) and Vincent Stanley (who initiated the company's Footprint Chronicles blog, which traces its suppliers' activities). The pair spoke recently at Yale, at a discussion co-sponsored by the Divinity School, the School of Forestry, and the School of Management (press release, here).

Chouinard spoke forcefully about a company's responsibilities not just to shareholders, but four other key stakeholders: employees, customers, communities, and nature. In "communities", he includes not just the physical locations in which a business operates, but also suppliers, as well as:

trade associations, nongovernmental organizations (NGOs), standards-setting organizations, nonprofits, and other citizens' organizations that may have an interest or something to say about what your company does. Advocacy groups like Greenpeace and PETA may confront you about your practices, as may individual citizen activists through social media like Facebook and Twitter. Friendly or not, those who engage with you are part of your community in its broadest sense and deserve your attention.

That sounds like a lot, doesn't it? But that's the reality of a globalized world. If you don't want to manage your supply chain thoughtfully, it might manage you ... right out of business.