Part 1: Managing Risk In Your Global Supply Chain - Setting Standards of Vendor Engagement

Part 1: Managing Risk In Your Global Supply Chain - Setting Standards of Vendor Engagement

April 20, 2017

CSR is a hot topic in the apparel industry right now, and I’m not referring to customer service, but rather Corporate Social Responsibility (CSR).  With so much competition and uncertainty, the last thing you want to do is risk your brand’s reputation at the hands of your global vendors. 

Does the Nike debacle ring a bell?  Today Nike holds the number 1 spot as the top manufacturer of sports equipment and is one of the world’s largest vendors of athletic shoes and apparel.  But in the late 90’s, Nike chairman and CEO publicly admitted that the brand had become ‘synonymous with slave wages, forced overtime, and arbitrary abuse’.  Had Nike not turned their reputation around by implementing a more rigorous social auditing regime and started paying closer attention to the operating rules and practices of its overseas vendors, who knows where the company would be today.

As a result of this and other incidents over the years involving child labor, factory fires due to poor conditions and inadequate safety preventions, etc., more and more companies have started putting together a set of social compliance guidelines and code of conduct they expect their vendors to adhere to in order to manage and mitigate risk.  Companies of all sizes should be implementing such programs, not just ‘the big guys’, and with advancements in technology over the years, it is becoming easier to manage.

The first step to implementing a CSR program is to define the Code of Conduct, or Standards of Vendor Engagement, that you expect your vendors to adhere to, those guidelines on which each vendor will be evaluated.  For example, ensuring non-discrimination, establishing rules on harassment and abuse, ensuring no child labor, etc.  (Download a sample list of Standards of Vendor Engagement – Establishing A Code of Conduct)  

Creating and sharing this Code of Conduct with your vendors not only standardizes the guidelines for evaluating compliance internally, but also keeps vendors informed on how they are expected to operate.  Once the Code of Conduct is established, you can create the associated forms for each vendor to fill out, as well as forms for inspectors to use when evaluating vendors.  With solutions like NGC’s Vendor Compliance platform, it’s easy to share the Code of Conduct with vendors, create standardized forms for evaluations, and more importantly, store and report on the results of the evaluations of your vendors, in a centralized location.  And in addition to scheduling initial inspections, using the calendars and alerts functionality, you can be notified when a vendor is due for re-inspection to ensure each vendor remains compliant and up-to-date on any and all required certifications.

Your company’s adherence to Corporate Social Responsibility is a big deal – and it doesn’t have to be a complicated and daunting process, not with the solutions available today.  By taking responsibility for the environmental and social footprint of your vendors, you’re bolstering a robust supply chain that not only protects your company’s reputation, but provides a solid foundation for the vendor’s long-term growth. Everyone prefers working with people they’re familiar with and trust, so preventing error and keeping your vendors in business is always in your company’s best interests.

Stay tuned for the next installment in this blog series where we discuss Establishing Terms on Which to Build & Maintain Healthy, Lasting & Successful Relationships with Your Vendors.