ARTICLE UPDATED ON MARCH 29, 2024
Ethical supply chains have gone mainstream, with fair trade products now commonplace and consumers from all age groups willing to pay more for ethical goods. This shift is particularly notable among younger generations. While building an ethical supply chain can be costly, it’s a worthwhile investment that delivers multiple benefits.
Ethical supply chains are essential for long-term business success beyond just improving brand reputation.
The Benefits of Transparent and Ethical Supply Chains
In our globalized world, electronic components and bagged salads can travel thousands of miles before reaching our shelves. Companies need to take the time to understand their suppliers’ policies, procedures, and practices to support unethical labor and environmental practices.Transparency, or visibility, is understanding every step and practice in a product’s supply chain. It is essential for creating an ethical supply chain, as it allows companies to track the origin of their products and the conditions under which they were produced. This is arguably the most crucial benefit of an ethical supply chain, but there are others.
- Greater Quality Control for Products: A 2023 NPR investigation revealed that slave labor is used to mine cobalt in the Democratic Republic of the Congo, a critical ingredient in lithium-ion batteries for electronics, including electric vehicles.
A 2021 Forbes article showed that the pandemic paved the way for agricultural workers in Italy to be exploited. Forced labor was being used in the tomato industry in Italy. Tomatoes are a key ingredient in many processed foods, such as pasta sauce and ketchup.
These are just two examples of the many ways that unethical supply chains can harm people and the environment. While supply chain visibility can only partially eliminate supply chain problems, ethical practices make surprises like these far less likely. If incidents occur, a company with a transparent supply chain will be better equipped to minimize harm and liability. - Superior Efficiency and Cost Savings: One of the critical benefits of ethical supply chains is that they can help businesses identify and address inefficiencies. When businesses know where their products are coming from and how they are being produced, they can better understand the costs associated with each stage of the supply chain. This allows them to identify areas where they can save money by reducing waste and improving efficiency. For example, a company that sources its products from a supplier in a country with low labor standards could save money in the short term. However, this company is also at risk of facing reputational damage and consumer backlash if it is revealed that its products are being made in unethical conditions. In the long term, it is more cost-effective for businesses to invest in ethical supply chains that produce high-quality products sustainably and responsibly.
- Easier Future Implementation of Circular Business Practices: Transparent and ethical supply chains are essential for sustainability. A circular business model, which reuses and recycles materials to make new products, is the foundation of a sustainable economy. The first steps towards a circular supply chain are the same as those towards a more ethical supply chain: companies need to know where their materials, packaging, and products come from and where they will end up.
Once companies have this knowledge, they can start experimenting with ways to reduce waste and close loops in the supply chain. For example, they can recycle packaging or use recycled materials to make new packaging. Sustainability is a key component of an ethical supply chain, and it is increasingly demanded by the public.
The Benefits of an Ethical Supply Chain Go Beyond Good Press
Ethical supply chains are often dismissed as mere marketing ploys, but they offer real benefits beyond public perception, including improved product quality, operational safety, and brand trust, which can lead to increased customer loyalty and market share.
Ethical supply chains are costly and complex, but they offer real benefits, including improved product quality, safety, and brand trust. Companies can start building ethical supply chains by using vendors with responsible practices, such as renting plastic pallets from a pooling provider.
A 2021 global study by Simon-Kucher finds consumers increasingly value sustainability and generational differences in willingness to pay for ethical products and services. Additionally, a study by the Boston Consulting Group found that companies with ethical supply chains are more likely to be profitable and have higher market shares.
Switching to plastic pallets is a responsible step towards an ethical supply chain. Plastic pallets are recyclable and durable, reducing waste and emissions. Plastic pallets are also lighter and more durable than wood pallets, which can reduce fuel consumption and emissions.
Companies looking to boost supply chain efficiency should consider using iGPS plastic pallets for all their shipping needs. Our lightweight, recyclable plastic pallets flow seamlessly through automated systems and reduce Total Cost of Business. For more information, contact us at 1-800-884-0225, email a specialist at [email protected], or visit our contact page.
