Building Capacity in Supply Chains By Helping Suppliers

July 31, 2008
Study in China showed that working directly with factory managers to equip suppliers with crucial information can increase capacity in supply chains.

A new report by Business for Social Responsibility (BSR) entitled, "Pilot Summary Report: Building Capabilities to Implement CSR Management Systems at ICT Suppliers in China," reveals that companies working directly with factory managers to equip suppliers with skills, knowledge and systems to take ownership of corporate social responsibility (CSR) issues are more effective in addressing persistent issues such as labor standards violations, environmental degradation, and poor health and safety protections.

The report is based on a series of recently completed pilot projects aimed at breaking through common barriers to improving factory conditions. Organizations in this collaborative project include BSR, the World Bank Groups investment climate advisory service, the Foreign Investment Advisory Service (FIAS), the Electronic Industry Citizenship Coalition (EICC), the Global e-Sustainability Initiative (GeSI) and the Shenzhen Electronics Industry Association (SEIA). In 2007, the collaboration published a report identifying the root causes of poor factory conditions, and providing recommendations for how customers, suppliers, government and civil society can all contribute to improved capacity among factories in China.

Based on findings from these reports and the recent pilot projects, there are several steps companies can take to build capacity in their supply chains:

  • Support multiple capacity-building strategies. Approaches can include providing generic tools (such as a factory committee or worker hotline to address concerns), conducting trainings, creating supplier-support networks and implementing factory-specific projects.
  • Focus on the business case. To achieve buy-in from suppliers, identify real incentives and allow supplies to shape their own approach to CSR improvements within the factory.
  • Integrate a mentoring system into the monitoring process. Work with the supplier to identify root causes of compliance issues. This strengthens the relationship between the company and the supplier, shifting focus from immediate compliance to continuous improvement.
  • Foster ongoing dialogue among stakeholders. These include customers, suppliers, NGOs, local government and industry associations. This reinforces each groups efforts, creating the potential for a much bigger impact on everyones CSR efforts.

Moving forward, BSR will apply these lessons to other industries and countries. "The challenges with capability building identified in these reports are not unique to the ICT sector or to China, and many of the recommendations can be applied to a wide variety of sectors and geographies," said Laura Commike Gitman, BSR Director, Advisory Services. "The project partners look forward to building on these lessons to help focus future capability-building efforts."

The Business for Social Responsibility is a nonprofit business association that serves its 250 member companies and other Global 1000 enterprises. Through advisory services, convenings and research, BSR works with corporations and concerned stakeholders of all types to create a more just and sustainable global economy.

The EICC consists of 30 companies that have come together in their common interest to improve working conditions and environmental stewardship throughout the electronics supply chain. This group supports a common code of conduct for electronics companies, the Electronic Industry Code of Conduct. The code covers expectations for performance across a range of issues, including labor, health and safety, environmental practices, ethics and management systems.

The Global e-Sustainability Initiative is a joint initiative of an international group of ICT service providers and suppliers, industry associations, the Carbon Disclosure Project and WWF, with the support of the United Nations Environment Programme and International Telecommunication Union. The EICC and GeSI are working together on development and deployment of a consistent set of tools and processes to measure, monitor and improve supply chain corporate responsibility performance across the ICT sector.

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