Getting to know your suppliers makes good sense

Getting to know your suppliers better makes good business sense.

Companies do not choose to purchase from "unethical" suppliers, but without credible management systems they simply cannot know how overseas suppliers operate their workplaces or source their materials.

Asking questions of suppliers is a good place to start. However, accepting answers at face value from companies in developing markets may not be enough. Ask some simple questions:

* Do you have a code of conduct for your suppliers?

* Do you assess existing or new suppliers against defined criteria? These might include employer practices, health and safety, working conditions for factories in developing countries, governance, environmental responsibility, or supplier management.

* Do you require your suppliers to have external certification?

* Do you audit your suppliers? If so, do you observe, or use, external validation and test documentation to validate your suppliers' responses?

* Have you selected or de-selected suppliers because of their environmental or ethical behaviour?

If the answers are predominantly no, then you cannot be sure that what you are buying does not expose your business.

So what measures can you take?

1. Make sure procurement/purchasing reports to a board member. Changing supplier relationships takes time and requires leadership from the top.

2. Select your top 10 suppliers or concentrate on a particular sector. The Warehouse started with timber.

3. Prioritise the rest by assessing your own key risks. Identify those products which have a high profile because they come from countries associated with human rights or environmental issues.

4. Develop a code of conduct for suppliers.

5. Ask suppliers to review their own performance against the code of conduct to provide you with a baseline.

6. Empower your buying team. Make sure that the person making the decisions understands the wider implications.

7. Set parameters for acceptance and improvement. Define what would make you walk away from a supplier.

8. Monitor suppliers against your code of conduct. There are organisations which conduct on- site audits in high-risk countries.