Corporate Social Responsibility (CSR) is commonly regarded as a necessity around the world. The good news is that CSR offers many advantages. However, a current lack of measures and mutual understanding across supply chains are impeding its implementation, and consequently the related stakeholders’ ability to benefit from these advantages.
Sustainability only started emerging as a vital element to a company’s operations roughly ten years ago. Now it is being studied and implemented by more and more companies across all operational departments. One of the reasons of its slow expansion was due to the market relations between supplier and buyer. Still occurring today, it is hard for manufacturers or service providers to align to retailers’ and buyers’ extra-financial requests due to the competitive nature of the market squeezing prices leaving them little time and money to manoeuver. Additionally, purchasers often trade off CSR aspects or commitments for prices and quality which implies that suppliers are not encouraged to initiate CSR practices.
Nevertheless, companies are increasingly acknowledging the potential of implementing CSR practices across internal operations, while also including it in their supply chain management approach.. Corporations are now working on multiple fronts to reduce supply chain risks and harness CSR advantages by reviewing sourcing, production methods, mapping operational risks and deploying new mitigation measures. One particular measure that companies are undertaking is a tool for supply chain monitoring and evaluating CSR risks and opportunities of their suppliers. Such a measure enables a buyer to enhance relationships, align practices with suppliers, eliminate potentially risky suppliers and combat external risks such as climate change.
Disruptions to supply chains are a major cause in undertaking sustainability measures as many of them could be avoidable with pre-emptive decision-making. These disruptions may be caused by social and ethical standards; e.g companies receiving bad publicity for not responsibly sourcing materials; poor labour standards abroad; strikes blockading the flow of goods or bad sourcing strategy caused by sourcing all materials from a country that is subject to instability.
Now that CSR awareness has risen due to the acknowledgement of key and big profile buyers, suppliers are more encouraged to take on CSR actions. This not only allows suppliers to become more resilient and stand out from their competitors, but also allows buyers to enhance their supply chain resiliency and stand out in their market. An excellent example of mutual benefits for suppliers and buyers can be seen through a CSR program that IKEA initiated for its suppliers. IKEA has set high standards for themselves and their partners. In order to enhance its sustainable values and relationships it has introduced its own program, called the I-WAY standards. This internal standard is provided to all suppliers and requests them to implement a list of “Must Requirements”. The list appears to be all-encompassing and highly demanding for a supplier that has not yet embarked on the sustainability voyage, but, once achieved, the supplier will reap the benefits of sustainability by being a solid and committed company. This mutually beneficial arrangement enhances IKEA’s supply chain sustainability and enables the supplier to become a long term partner for the Swedish giant.
On the one hand such self-made programs are a great indicator that the corporate sector is moving ahead towards steering responsible businesses; on the other hand they are, in some cases, very hard to implement for certain companies and sectors owing to a lack of time, money or practical tools. Research conducted by Stefańska (2015) on suppliers that interact with retailers points out benefits but also issues between the two parties that hinder the full opportunities and advantages of implementing CSR. Many of the suppliers interviewed said that they were not exactly aware of the retailers’ motivations or vision; nor did they associate themselves with some retailers’ aspirations or plans. This would indicate, that from a supplier’s perspective, these programs become a simple strategy procedure for selection rather than an inclusive supply chain program. Participants are not given any recognition and do not see any return for their efforts other than gaining a contract. Suppliers also lack interest aligning with retailers programs due to the very nature of a competitive market. As previously stated in this article, suppliers become restricted by time and money therefore leading to a lack of interest with regards to retailers’ efforts. Retailers will be less likely to deal with this problem as they are not facing the same problems as suppliers and likely dispose a higher portion of their budget to implement sustainable measures.
Another issue is that a proportion of supplier applicants are conducting similar programs with different buyers requesting dissimilar commitments. This implies that suppliers cannot be fully engaged towards their commitments and are not reaping the advantages of CSR as it is asking too much from them. The aforementioned issues illustrate that neither the supplier nor the buyer are able to seize the full advantages. CSR progress is halted due to a lack of engagement and efficiency. There is increasingly a need for a comprehensive framework that provides a clear, inclusive and rewarding scheme for both supplier(s) and buyer(s). A solution to this is Sustain-In’s Supply Chain Stewardship Program. Providing a platform that links suppliers with buyers around CSR matters.
Buyers are able to use this platform as a management tool for their initiatives and programs. It allows them to engage with their suppliers, clearly communicate common goals and work towards implementing new sustainable practices. Sustain-In’s platform is deployed as an audit and communication tool for the buyer. It permits the buyer to assess what suppliers have put in place internally and communicate what actions are needed in the future. Future measures are then monitored and registered on their online account so that the buyer can conduct full assessment of its supply chains.
The main objective for the buyer is to assure themselves they are working with committed and responsible partners. The platform not only allows the buyer to request certain commitments from the supplier, but also allows the supplier to put forward other commitments and measures in place to the buyer. Proving their engagement to sustainability and allowing the supplier to implement actions of their own. They may also use the platform tool individually in order to demonstrate beforehand their commitment to a sustainable world.
Most importantly, buyers need their suppliers to progress with ease and no constraints in order to accomplish progress themselves. The Sustain-In platform enables the suppliers to conduct an evaluation that is valid for one year and communicate their report to multiple buyers if they need to. By saving time and effort, suppliers are given the chance to work on CSR matters more efficiently. Therefore enhancing their competitive advantage and the one of their buyers’.
-IHS Markit. 2014. Supply Chain Resilience. Available at: http://cdn.ihs.com/www/IHS-Quarterly-Q1-2014.pdf
-Thorlakson, T. et al. (2018). Companies’ contribution to sustainability through global supply chains. Proceedings of the National Academy of Sciences, 115(9), pp.2072-2077.
-Stefańska, M. (2014). Competitive advantage based on CSR in supply chains–suppliers about retailers strategy. International Journal of Arts and Science. 7. 35-44.
-IKEA. 2016. IWAY standard. Available at: https://www.ikea.com/gb/en/doc/general-document/ikea-download-the-iway-standard-.pdf__1364450370634.pdf