Outsourcing, CSR and Supplier Management — Curious Intersections (Part 2)

- July 19, 2012 4:07 AM
Categories: CSR, Jason Busch, Outsourcing, Suppliers |

Please click here for Part 1 of this post.

In suggesting where companies sometimes begin to implement programs monitoring worker, labor and related environmental conditions in their supply chain, AMD’s Tom Mohin suggests that auditing suppliers usually comes first. But as anyone who has ever toured a plant or facility when a supplier didn’t have adequate time to prepare (read “clean up”) knows, the results of an audit are, well, inevitable. To wit, “It is an axiom of life that virtually all audits will find something wrong…regardless of how well the factory is managed. Thus, most audits generate a list of “corrective actions” which starts a cycle of remediation and re-auditing.”

Next, though, Mohin goes further, suggesting that, “over time, relationships based primarily on auditing can be overly adversarial.” Here at Spend Matters, we would argue that auditing as a continuous process that leverages requests for information rather than just corrective action requests based on onsite audits as well as virtual audits (which may not even be described as an “audit”) can serve as a foundation for two-way dialogue as much as a measure to drive to what suppliers may look at as punitive activity.

Moreover, the depersonalization of gathering and managing information that comes from the use of supplier information management tools that request information from multiple parties at suppliers (this is where branching supplier workflows for supplier responses and feedback are so critical, for you frequent readers of our research on the subject) which enables oversight and management by exception, the human touch, when needed, can become a gentle inquiring one. For example: “we saw something here in your responses and during our last on-site visit…just want to confirm this is accurate and have a discussion around it.” Contrast that with: “based on our visit as of 10 July 2012, you are failing to adhere to our supplier code of conduct, Section 9-A, at facility XYZ. Kindly submit a corrective action plan to us no later than 1 August.”

Yes, I agree with Mohin that, “ultimately, suppliers are responsible for their own social and environmental performance.” But how we influence and sway behaviors through a combination of tools, visits/audits, carrots and sticks can have a dramatic impact. Yes, supplier management is really like parenting rather than babysitting. But lest companies take the analogy too far — remember, you can always walk away from a supplier, leaving the bad baby on someone else’s doorstep (while ringing the doorbell and broadcasting the sound for all to hear if they put our own reputation in danger).

- Jason Busch

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