The effects of social issues on the supply chain

While consumers might not consider it when doing a grocery run, there are many processes that go into delivering value to consumers. In 2021, the supply chains that service consumer markets involve many players and often span more than one country – if not more than one continent. The purpose of Supply Chain Management (SCM) is to improve the profitability of businesses by streamlining these processes. The supply chain has many aspects that need attention, not just the economic, technical and legal ones. The biggest of these is the growing ethical and social interest from consumers about how products are sourced, produced and delivered.

Moral Rules

Any product or process-related facets of a business that have an impact on human safety, well-being, and community development are considered to be social issues. Labor conditions, child labour, human rights, health and safety, minority empowerment (including marginalised groups), and gender are a few examples.

The Global Web Index confirms that consumer awareness around social and environmental issues is at an all-time high. NGOs and civil society are demanding ethical and accountable behaviour from corporate players and this mindset is beginning to reflect in consumer buying patterns as can be seen in the infographic below:

demanding ethical and accountable behaviour

As businesses begin to reimagine their chain of supply, the hope is (from a consumers perspective) is that this will lead to better standards of living, better working environments and guaranteed safety for workers globally which in turn should lead to a better world.

Ethical cunsumer

As companies start taking these social pressures more seriously, they should do so responsibly and with the right intentions. Consumers social expectations go further than just what stickers are placed on products and see through shallow brand promises made by those that just want to fill their pockets. What consumers want and expect from brands more than anything is long-term change and commitment.

While the average consumer may not have a full understanding of the intricacies of SCM, they certainly have their own subjective perceptions of businesses, suggests the Regent .

A Business Wire article further explains that consumers expect corporations to deliver goods and services and to deliver them against a commitment to ethical practices. Businesses who are ‘caught’ in controversy about the ethics of their operations face an inescapable reckoning across social and digital media platforms. Such controversies threaten to erode the consumer’s trust in the brand and with it their likelihood to purchase. For this reason, it is crucial that decision-making at all levels of the supply chain takes into account how best to address social issues.

At a surface level there appears to be great tension between the interests of external stakeholders who demand accountability and businesses whose goal is to improve profitability. Forbes suggests that if social issues are regularly considered in decision-making and processes in the supply chain, they can be a strength instead of a liability waiting to happen.

In conclusion, social issues should be factored into the SCM process in a way that attempts to balance the expectations of external and internal stakeholders. There are numerous ways in which this can be achieved, including through improved business reporting on corporate social responsibility (CSR), implementing codes of conduct, and collaborating with suppliers about social issues in a similar manner.

Developing a trust culture, fostering commitment, collaborating, and developing a solid foundation will be necessary for addressing social issues in the supply chain.