The Ti Blog: Tech companies, supply chains and ethics

As an academic theory, sustainable supply chains have become a hot topic of debate. How, in such a globalised economy, can companies ensure each and every aspect of their supply chain is not only ethical, but ethical to a standard consumers are increasingly demanding?

Ti’s latest edition of its best-selling Global Contract Logistics report includes analysis from the company’s CEO John Manners-Bell on the importance of an ethical and sustainable supply chain strategy for many retailers.

Within his chapter, Manners-Bell states: “A tripartite approach to supply chain management is critical to ensure long-term sustainability, although striking a balance between each of these core ‘pillars’ will be challenging.”

In other words, a strategy that prioritises profit could well work for your businesses in the short-term but, if you’re discounting your employees and the impact your business has on the environment you’re effectively setting yourself up for trouble in the longer term. Indeed, by focusing only on one of the following; economic viability, environmental accountability or social responsibility, you may compromise on functional decisions, resulting in sub-optimal operating conditions.

Tech companies staffed by millennials who, as a generation, place increasing importance on ethical business practices, are often highlighted as paragons of this new corporate virtue. Indeed, to discuss this topic and not mention Apple would be remiss. The tech giant, which is often held as the new standard for corporate ethics, has not been without its problems.

In a recent article published by Wired, journalist Edwards Humes considered the lengthy supply chain involved in producing the iPhone. Some parts “go on a hopscotching world tour from one country to the next and back again as one piece is joined to another to create an assembly, which is then moved elsewhere in the world for another part to be inserted or attached.” He explains in fascinating detail the journey of the phone’s home button, here, which immediately sets alarm bells ringing for those of us concerned about the environmental impacts of logistics.

When President Obama quizzed Steve Jobs on what it would take to produce the iPhone in the US he was met with a resilient and profit-driven response “Those jobs aren’t coming back.” In other words, cost savings and flexibility offered by producing the product across Asia outweighed any benefits of a US-company creating US jobs.

However, according to its 2016 Supplier Responsibility report, Apple cut its carbon emissions by 13.8 thousand tonnes. Indeed, the company states: “In 2015, we launched our Clean Energy Program to reduce carbon emissions across our supply chain, which makes up nearly three-quarters of Apple’s total carbon footprint. In China alone, we’re working with our suppliers to install more than 2 gigawatts of clean energy. Foxconn, our first partner, will create 400 megawatts of solar energy by 2018 — enough to power final production of iPhone at its Zhengzhou factory.

Aside from the overarching discussions, warehousing is just one of the specific ways in which companies can build environmental and ethical practises into their supply chains. Examples and case studies to demonstrate how this can be achieved are available in the upcoming Global Contract Logistics report.

Again, an example from Apple’s supply chain highlights that in a global supply chain, even a focus on this small aspect within a larger chain can create visibility issues. The 2011 explosion at one of Apple’s primary suppliers’ factories in Sichuan, China, killed four workers and injured 18. It was revealed that the tragedy could have been avoided if the correct safety measures had been implemented in advance. It was reported that company stocks dropped value by $30bn in one day, further evidence to support the argument that to achieve long-term high profits, sustainability and ethical behaviour must be balanced as part of a company’s supply chain strategy.

Are you confident that your supply chain would stand up under the same level of scrutiny?

For more information on Ethical and sustainable supply chain strategies, or to find out more about the Global Contract Logistics report, click here.