Companies and businesses influence the development of society in the process of interacting with suppliers: choosing a specific organization, product, or service. Ethical procurement management aims to ensure that companies are held accountable for adding value and only select suppliers who are committed to the principles of ethical development in modern society. To achieve this goal, the selection of suppliers should focus on the maximum level of environmental friendliness and social compatibility of business processes. In addition to the pure procurement process for goods and services, ethical procurement management includes processes of assessment and interaction in the market, right up to the management of supplier relationships. The main thesis of this work is that each management system is responsible to a greater extent for one function of the supply chain in the context of ethical principles. Below will be considered the prominent examples of implementing a responsible and ethical approach to the structure of the supply chain.
Ethical Management Systems Analysis
Ethical purchasing management reduces operational risks associated with brand reputation and helps companies gain a competitive advantage. Therefore, many companies voluntarily follow principles that promote an ethical corporate culture and encourage responsible and environmentally friendly actions. An example of this is the “Mission for Responsible Economic Action” initiated by the WCGE (Wittenberg Center for Global Ethics) and adopted by organizations (Withers & Ebrahimpour, 2018). Another example is the Bangladesh Fire and Safety Accord between brands H&M, Zara, Puma, and IndustriALL Global Union & UNI Global Union (Michael & Helms, 2018). The agreement aims to improve workplace safety through fire safety measures and fire-prevention design during the construction phase at the Bangladesh Major Textile and Industrial Center. These measures aim to improve the working conditions and safety of personnel in the supply chain, which contributes to their satisfaction, involvement, the attractiveness of vacancies for qualified personnel, and, as a result, to improve the company’s financial performance. However, not every company can allow such large-scale events.
Customer relationship management systems in a commercial firm accumulate customer contact data and generate reliable knowledge about customer behavior, ways of meeting their needs, and the most profitable ways to interact with them. The information received about the client is accumulated in the corporate knowledge system, which has a stimulating effect on the marketing and information capabilities of the company. Ethics at this stage is governed by the functions of using this information: firstly, the use and dissemination of any personal information of the client through unprotected communication channels may negatively affect the brand; secondly, the recommendation system of the client’s personal preferences should take into account the possible negative impact of the recommended content. Consequently, these systems are ethically regulated, as a rule, in marketing matters.
The constant search for more efficient ways of production, logistics solutions forces suppliers and customers to remain in a state of constant competitiveness. The principles on which many large companies are based tend to be responsible for transparency and innovation. The openness of the processes promotes more honest relationships between stakeholders and allows for collaborative development. An innovative approach implies a constant injection of finance into R&D, which is responsible for the quality development of the supply chain through more advanced solutions. Ethics at this stage is most often defined in equality and freedom of competition: any company can become a supplier to any company on conditions of free competition and subject to all requirements in terms of safety, reliability, and adherence to the norms of current legislation. An innovative approach also contributes to developing logistics solutions and new IT developments for specific business processes. Otherwise, in a rapidly developing world, companies may lose their competitiveness.
Some clients seek to optimize inventory while minimizing the need for warehouses, while others focus on comfortably accumulating assets in the form of goods. At this stage, optimization occurs in the organizational structure of this stage of the supply chain. As a rule, responsibility for each activity segment begins to differentiate: specialists in real estate, logistics, transport services, and merchandising appear. As a result, all segments must work with quick and easy communication with each other and the ability to integrate various processes, which means that this system supports the function of logistics operations. At this stage in the supply chain, ethics are often more sustainable to protect the environment and optimize processes that, for example, reduce emissions of harmful gases into the atmosphere (Islam et al., 2021). These events also contribute to brand reputation development but again require certain highly qualified personnel to develop similar solutions and financial investments for various changes.
Ethical operations can determine not only a company’s brand reputation but also the effectiveness of relationships with customers and suppliers, which manifests itself through the functions of marketing, logistics, and IT. In order to develop each system, much-skilled labor and financial investments are required, while only improved working conditions and successful marketing operations contribute to an indirect increase in financial performance. However, any business that has become a large company must meet the requirements of social and environmental responsibility based on generally accepted ethical principles.
Islam, M. S., Karia, N., Taib, F. M., Ara, H., & Moeinzadeh, S. (2021). Ethico-religious green supply chain management (GSCM): embedding Islamic ethics’ codes for improving environmental concerns. Journal of Islamic Accounting and Business Research. Web.
Michael, P. D., & Helms, M. M. (2018). Toward a global business standard for supply chain ethics. IEEE Engineering Management Review, 46(4), 112-121. Web.
Withers, B., & Ebrahimpour, M. (2018). The effects of codes of ethics on the supply chain: A comparison of LEs and SMEs. Journal of Business and Economic Studies, 19(1), 3766. Web.