As an entrepreneur, you are probably very focused on your product and its marketing and sales. You don't have much time to think about the supply chain, as long as it meets your expectations in terms of quality, pricing and delivery.
Until something goes wrong. A fire in a factory in Bangladesh exposes unsafe working conditions. Suddenly, the fabric you purchased has blood on it. Or you discover that an assembly line far away employs children. Or the tantalum contained in an electronic component is discovered to have enriched warlords in the Congo. Suddenly, you are an unknowing criminal in the web of globalization.
Working more closely with your supply chain can save you reputational damage, but it can also make you a sustainability champion, save you money, and improve the bottom line. Here are five areas to focus on:
1. Human rights. You need to know that your suppliers have good human rights records, so that you can maintain yours. Select them carefully; visit them; audit them. When you know they have a good record, say so. Publish a human rights statement on your website. Sign on to the UN Global Compact's 10 Principles.
2. Environment. What environmental profile do you and your supply chain have? If you measure your carbon footprint (or water footprint), you will automatically be looking at your supply chain: the carbon impact of your product begins with its raw materials, continues in their transformation, assembly and transportation all the way to the customer, and terminates only after disposal or recycling. Again, you want to avoid any negative surprises about a supplier's environmental record, and you can use your leverage as a customer to force improvement. The Carbon Disclosure Project offers a supply chain management program.
3. Waste. Is your product recyclable, and how can your supply chain make it more so? Are you using recyclable packaging? You can quickly boost your reputation by using noticeably environmentally friendly material such as so-called "mushroom packaging." Are your manufacturing suppliers sending waste to landfill? How do they dispose of factory waste with toxins? Audit them. Efficient waste management can be cost-effective as well as better for the planet.
4. Corruption. How much do you know about the people involved in your supply chain? Is there anything suspicious? This is of course an area fraught with legal, pecuniary and reputational risk. Get informed.
5. Engagement. Close engagement with suppliers can be very rewarding. It can not only avoid pitfalls but can lead to problem solving, innovation, and cost savings. For large companies supplier engagement is institutionalized, including through supplier portals, questionnaires, audits and workshops. It is a two-way conversation, and only good can come of it. Take the time to do this well.
Reputation management has become an art and a science in business today, but it starts with basic common sense, good relationships, and attention to detail.