How to manage your supply chain ethically

Here’s how to implement effective supply chain management for commercial advantage but also to comply with environmental, social and governance (ESG) standards.

Managing the supply chain has become a key aspect of planning for print professionals. Our industry depends heavily on the seamless flow of raw materials and distribution networks. Supply chain management is a critical component of business strategy. For the printing industry, effective marshalling of the supply chain ensures smooth operations and can also help hugely towards meeting ESG standards.

A supply chain in the printing industry can extend from raw material suppliers to distribution channels, assembly, packaging, logistics partners and even customer services. By understanding and managing these elements, you stand to gain significant commercial advantages while, at the same time, contributing to broader societal goals such as sustainability and ethical production practices.

The importance of ESG in supply chain management

Effective supply chain management in the printing industry should, ideally, consider the societal implications of its operations. This includes addressing issues such as exploitation, modern slavery and environmental impacts. Companies are increasingly focusing on ESG factors to align with modern consumer expectations as well as regulatory requirements. Failure to prioritise ESG can lead to reputational risks and financial repercussions.

For example, a recent scandal involving Tesco highlighted the dangers of ignoring ESG considerations. Workers in Thailand producing jeans for Tesco were found to be trapped in forced labour conditions, leading to significant backlash against the brand. This case underscores the importance of ensuring good provenance for products and the reputational damage that can arise from failing to address ESG issues. Consumers are increasingly demanding transparency and ethical practices from the companies they support, and can be very vocal where they see poor supply chain practices.

Aligning with global goals

The print industry can also make a major contribution to achieving the United Nations Sustainable Development Goals (SDGs), which aim to address global challenges such as poverty, inequality and climate change. For instance, promoting gender equality and creating job opportunities are key aspects of the SDGs that businesses can integrate into their supply chain management strategies.

Implementing ESG-focused supply chain management not only helps companies align with global goals but also enhances their competitive advantage. Customers have proven themselves more likely to support brands that demonstrate a commitment to sustainability and ethical practices.

What are the risks in supply chain management?

Print providers face several risks in this area. Identifying and mitigating these risks is crucial for maintaining efficient operations and ensuring compliance with ESG standards.

Natural disasters, political instability and pandemics can disrupt supply chains, leading to delays and increased costs. The COVID-19 pandemic highlighted vulnerabilities in global supply chains, affecting the availability of raw materials and transportation.

In addition, ensuring consistent quality across the supply chain can be challenging, especially when dealing with multiple suppliers. Variations in quality can lead to customer dissatisfaction and increased costs due to rework or returns.

Faulty supply chain management can lead to a failure of regulatory compliance. The printing industry is subject to various regulations related to environmental impact and labour practices. Failing to comply with these regulations can result in fines, legal issues and, as already discussed, reputational damage.

Ensuring that materials and products are sourced ethically is a significant challenge. Companies must verify that suppliers adhere to ethical labour practices and environmental standards, which can be difficult to monitor across complex supply chains.

Lastly, changes in the cost of raw materials, labour and transportation can impact overall profitability. Volatile prices on materials like ink, paper and other substrates can affect your bottom line and require print companies to adjust their pricing, with knock-on effects.

Offsetting risks in supply chain management

Several strategies and products can help print companies manage the above risks effectively.

1. Leveraging technology: Implementing supply chain management software can provide greater visibility and control over supply chain operations. These tools, such as Sedex Analytics, Logiwa or Magaya, help companies track inventory levels, monitor supplier performance and predict potential disruptions.

2. Partnering with external experts: Engaging with external partners, such as ethical trade organisations and supply chain management consultants, can help companies identify and mitigate risks. For example, noted provider Sedex has a strong track record in responsible sourcing and supply chain transparency, helping you to trade ethically while meeting your social responsibility goals.

3. Implementing ethical audits: Conducting regular audits of suppliers can help ensure compliance with necessary standards. These audits can assess labour practices, environmental impact and regulatory compliance, providing valuable insights for improving supply chain practices. Audits are usually divided into system, process, product and compliance.

4. Diversifying suppliers: Relying on a single supplier for critical materials can be risky. By diversifying their supplier base, companies can reduce the impact of disruptions and ensure a steady supply of materials.

5. Training and development: Providing training and development opportunities for employees involved in supply chain management can enhance their skills and improve decision-making. Well-trained employees are better equipped to identify and address potential risks. In the UK, CIPS offers entry-level and advanced certificates in procurement and supply operations and a diploma, for example.

Commercial advantages of effective supply chain management

Optimal supply chain management offers numerous commercial advantages for print companies. By optimising supply chain operations, companies can achieve better cashflow, more reliable suppliers and enhanced customer satisfaction.

Streamlining supply chain operations can reduce inventory holding costs and improve cash flow. Companies can reinvest these savings into growth plans, marketing or pass them on to customers.

Establishing strong relationships with suppliers can lead to more reliable deliveries and better quality products. Consistent quality and timely deliveries enhance customer satisfaction and should also reduce returns.

The benefits spread to customers as well. By prioritising ESG and sustainability in supply chain management, companies can meet customer expectations for ethical and sustainable products. Satisfied customers are more likely to become repeat buyers and brand advocates.

Companies that demonstrate a commitment to sustainability and ethical practices can differentiate themselves in the marketplace. This competitive advantage can lead to increased market share and brand loyalty.

Supply chain management in the printing industry is a complex yet vital aspect of business operations. By focusing on ESG considerations and leveraging technology and partnerships, companies can manage risks and enhance their competitive position. While it can be challenging, the benefits are significant.