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Thursday, April 24, 2014

The Corporate Social Responsibility Shift on Supply Management

Most are aware of, and many organizations have been successful in addressing, Friedman’s technology and collaboration flatteners. We can now communicate, and, if desired, collaborate globally and instantly. This has provided many market opportunities to both buyers and sellers. Technology has even helped us with language translation and currency conversion. These changes have enabled a truly global marketplace, making it much easier for another significant change.

Idea light bulb on green backgroundThe complexity of products, services, markets, and technology drivers has led many companies to re-evaluate their core business and, through the traditional make/buy decision process, shift to outsourcing a greater portion of the materials and services needed for the business. This has expanded the demands of supply management, not only in volume, but in the sophistication required to competitively provide the purchased materials and services. Combine this with the communication and collaboration tools and the offshoring to lower labor or higher material availability regions has exploded.

In 1987 the United Nations World Commission on Environment and Development established a definition for the concept of sustainability as “Sustainable development meets the needs of the present without compromising the ability of the future generations to meet their needs”. This goal has led to the strategy that companies should focus on a “triple bottom line”: profits, society, and the environment in corporate social responsibility (CSR). In some regions, for example, the European Union, regulations are dictating more and more CSR standards related to the factors of environment and society. Some corporations are making CSR part of their strategic initiatives, and in some cases the consumers and society are placing pressure on companies to be sustainable.

Technology-enhanced communication, corporate core competency assessment, and a push for CSR have combined to drive new business strategies. However, those changes not only moved the responsibility from internal sourcing (make) to external sourcing (buy), it also placed heavier accountability for CSR on the supply management team. Corporations cannot escape CSR by outsourcing and claiming no responsibility for the supplier’s actions. Managing the extended supply chain is part of supply management’s responsibilities.

The recent focus on the major retailers to take responsibility for their supply chains that reaches to second-tier suppliers in Bangladesh may prove to be the tip of the iceberg for all supply management teams. Global communications also enable visibility into remote operations anywhere in the world, and with corporations taking a strong strategic stance on CSR, supply management professionals will be held accountable for the social and environmental actions of their extended supply chains.

 

user_avatarJohn Mawhinney is the director of supply chain management programs and assistant professor for supply chain management at Palumbo-Donahue School of Business at Duquesne University in Pittsburgh, with 21 years of teaching experience. He has 26 years of industry experience including 18 years with Westinghouse Electric Corp. in leadership positions in logistics, distribution, transportation, purchasing, and supply chain management (SCM) systems. He earned a B.S. degree in logistics and marketing at Ohio State University, an MBA from the University of Pittsburgh, and a doctor of education in SCM education at Duquesne University. He is a member of the American Society of Transportation and Logistics and the American Production Inventory Control Society.

 

This article was originally published at My Purchasing Center and has been republished with permission. For more stories, visit MyPurchasingCenter.com.

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