A supply chain is something a company usually ignores until "dirt" derails it -- meaning the discovery that the company's sources use child labor and violate other U.S. fair labor standards.
As comedian John Oliver illustrated in a segment on the fashion industry, clothing makers may find it more expedient to pretend their own chains are clean than to actually clean them. "Deniability seems to have been stitched into the supply chain,” Oliver said.
As an entrepreneur, you too have the choice of stitching accountability, rather than deniability, into your own supply chain. The public doesn’t necessarily know what an “ethical” supply chain looks like, so it’s on you to discover what that means in your particular industry.
Avoiding child labor and sweatshops is probably the minimum you can do. What about the middlemen who force local cotton farmers to sell their crop at an extortionate price? What about the factory that applies rancid chemicals to that and then empties those chemicals into the local water supply?
If you set out to create an ethical supply chain, how do you succeed where multibillion dollar brands either fail or just don’t care? From my own experience launching Boll & Branch, a socially-conscious bedding and linens company, I can attest that you have to start at the source and examine your product's journey. Whether you make electronics or doormats, the method for creating and preserving an ethical supply chain is the same. Here are some suggestions.
1. Really research your product.
How is your product actually made? Where do the raw materials come from? In some industries, production has barely changed in the last 100 years. Unsurprisingly, offshore suppliers often look like they belong in the Gilded Age, too.
Choosing the same suppliers as the category leaders could lead you down a dark path. Instead, assume everyone is doing it wrong and create your own chain.
2. Get on a plane.
You can’t understand your supply chain unless you physically see it with your own eyes. When you walk around a facility (in the United States or abroad), check basic boxes: Is the facility clean? Are there accessible fire exits? Is there temperature control?
Ask the workers questions: How much do you work? Are you happy here? Can you provide for your family? What’s the turnover rate? If you see or sense something dirty, trust your gut.
3. Hire feet on the ground.
Once you choose sources for raw materials and facilities for production, don’t assume that your supply chain will stay clean when you’re 10,000 miles away. Hire an on-site team independent from the factory operator.
At our company, our extended team is always on site watching over our operations in India. Team members send daily reports, photos and status updates. In addition to maintaining our quality standards, they confirm that the facility is paying workers on time, limiting workdays to eight hours, providing health insurance benefits and upholding safety. We monitor those factors aggressively because we consider them essential to an ethical operation.
4. Work with third-party certifiers.
I consider Fair Trade USA to be among the closest partners we have at Boll & Branch. That organization ensures that our workers are paid a fair wage, and they inspect our facilities quarterly. On top of that, it executes a full audit of our business and financial data.
Third parties like Fair Trade and the Global Organic Textile Standard (GOTS) regularly point out things we never would have noticed. For example, one of our facilities in India shares a building with other companies, which, unbeknownst to us, blocked fire exits with supplies. To preserve our own standards, we upgraded and now monitor safety standards throughout the entire facility. It isn’t about cost -- it’s what's right.
A chain you can believe in
Building a clean supply chain is more difficult and expensive than following the norm. It would be easier to visit the Garment District in New York City, find an importer and turn a blind eye to the people behind the product. If that thought makes you queasy, good. You can create a 21st century supply chain and still out-compete companies that choose deniability over accountability.
If there’s a conflict between your values and business practices, no amount of profit will ever give you peace of mind. So, start from the ground up and do things the right way. Don’t trade your morals for margins.