Ethical Sourcing in the Downturn — Tesco Sets an Example

Perhaps the two companies that have the most to lose when it comes to a public backlash from ethical sourcing violations (e.g., child labor, poor working conditions, etc.) are Wal-Mart and Tesco. Many of us stateside know the lengths to which Wal-Mart will go in order to avoid embarrassing supplier breaches. But Tesco is no retail ethical sourcing slouch either. China Supply Chain Council recently posted a detailed article on their site that describes some of Tesco's processes in their international sourcing group. According to the story, "All 800 of TIS's suppliers undergo both technical and ethical audits. The former looks at machinery and product standards, the latter looks at how the factory treats workers, from three points of view; its own research, from what workers say, and what the factory owners say. Once on board, suppliers are subject to arranged and surprise visits from Tesco. Tesco also uses external auditors. Tesco's UK HQ has a list of 530 centrally approved supply chain experts from 11 different organizations that it sends to TIS and its hubs. These auditors are themselves audited, to add an extra safety net."

Tesco teaches its employees to maintain a skeptical eye when analyzing suppliers for violations by teaching a course called "Buying With Your Eyes Open" that teaches "how to smell a rat". Personally, I love that description. It captures the almost sixth sense you sometimes need to have to sniff out when a supplier is not behaving (and is covering their tracks before a site visit or during an audit). Even in a downturn when consumer thrift takes precedence over emotional "fair trade" type buying, companies like Tesco can't afford to slip up when it comes to the sales/marketing risk posed by supplier ethical sourcing violations. And that's why global sourcing operatives should all learn to sniff out rats. Because after you see them, it's usually too late.

- Jason Busch

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