5 Business Basics of Ethical Sourcing

In recent years there has been a backlash against the traditional business practices of outsourcing manufacturing to the cheapest bidder heedless of their ethics. In the wake of several industrial disasters, boardrooms and their consumers alike are searching for more ethical, responsible, and socially aware sourcing methods. In today’s world, ethical sourcing has become an advantage all on its own as companies who source responsibly take business from those caught in sub-standard practices. Here are five tips to help your sourcing practices.

Factor in the Environment

Many major companies, especially in the controversial fashion industry, have been altering their supply chain to benefit the environment and keep our planet healthy. Companies such as People Tree have also gained popularity for their efforts in the industry as they’ve worked to produce ethical and eco fashion collections. They’ve received increased profits and publicity from their decision. Once you’ve audited and found the sources with the smallest environmental impact, make the change. Any loss in profits will be compensated by the positive publicity from your transparent decisions.

Utilize Available Information

Always perform a first-pass risk assessment of all your sourcing companies. All the data you need to paint a picture of their ethical practices is available from risk management and business assessment companies. For your own investigations, most company data is available on the web via their website or ethics watchdog sights. This assessment will include checking on the ethics of their practices, searching for company executives who are politically exposed and vulnerable to bribes, and any history of sanctions by government entities.

Embrace Philanthropy

Do some good in the world. Many corporations engage in charitable work with profits from their production, earning them excellent publicity, customer/employee loyalty, and providing help to those who need it. doTERRA, for example, boasts of 3 priorities when making decisions about product and materials sourcing: ensuring sustainability of resources, truth in marketing, and giving back. Therefore, you might be interested in selecting an area along your production cycle where charity is needed and open a fund.

Establish a Transparent Relationship

Lay out the expectations of your partnership with your sources right from the get-go, and put those expectations into practice at every interaction. Practice transparency with your suppliers. Instill the knowledge that you may audit their businesses unannounced. Employ more active methods of compliance than the basic tick-box paperwork, including site visits if needed. Also, consider using social media to solicit information from their employees.

Establish an Internal Culture

To maintain a clean slate, your company must practice what it preaches. Institute random internal audits to keep your directors honest. And in the age of information, an anonymous means of your floor employees to express their grievances is a critical feature.

Overall, it has been shown that ethics in business and business practices such as sourcing and sustainability is a great investment into a healthy consumer and company relationship. Having control over your company’s effect on the environment and limited resources demonstrates a greater interest in the future. For more information about sustainability or company examples of sustainability, check out our blog!


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