Using Management Systems for Socially Responsible Practices in Supply Chains Using Management Systems for Socially Responsible Practices in Supply Chains

Using Management Systems for Socially Responsible Practices in Supply Chains Using Management Systems for Socially Responsible Practices in Supply Chains Using Management Systems for Socially Responsible Practices in Supply Chains Corporate social responsibility programs are an essential aspect in the business model of many global organizations, and are responsible for fundamental societal changes around the world. However, supply chain partners often have inadequate systems and procedures in place to implement and manage the social responsibility requirements of their client organizations. Further, when instances of non-compliance are identified, efforts are often focused on addressing symptoms instead of root cause issues. As a result, instances of non-compliance are likely to continue and overall efforts to meet social responsibility standards can be compromised. A formal management system describes in detail the policies and procedures that an organization follows in order to meet a specific set of objectives. Initially introduced in the 1970s and 1980s to provide a framework for quality improvement programs, formal management system structures are used today in a wide range of organizations as a foundation for employee health and safety programs, environmental initiatives, energy conservation efforts and, now, social responsibility policies and practices. Effective management systems are an effective capacity building tool that can significantly improve the performance of a supplier’s social responsibility program, reduce the risks associated with undesirable practices and make more efficient use of valuable resources. This UL white paper discusses how the application of a management system framework can help suppliers achieve and maintain the social performance requirements of their customers and client organizations. Beginning with a brief overview of the challenges of achieving social performance objectives throughout an organization’s supply chain, the paper then discusses the management system framework and how it can be applied to social responsibility policies and practices. The white paper provides information on the tasks involved in implementing a social performance management system, and concludes with a list of the benefits derived from adopting a management system framework for driving social responsibility performance. page 2 Using Management Systems for Socially Responsible Practices in Supply Chains Challenges in Achieving of a clear imperative, suppliers cause issues. Although such an Social Performance Goals can be expected to perform in approach may temporarily suffice in Supply Chains a manner consistent with their to address a problem in a crisis, it standard practices, which may or seldom provides the fundamental The ability to develop effective working may not properly address social fix that permanently prevents relationships with suppliers all over responsibility concerns. that problem from recurring in the world provides businesses with a the future. number of important advantages in • Lack of adequate oversight of a globally competitive marketplace. supply chain activities—Even • Divergence of social performance Working with global suppliers can when social performance goals ideals from cultural norms— support an organization’s efforts to are clearly presented to a supplier Finally, the values embedded in maintain quality, control costs, increase as a requirement for doing an organization’s social production flexibility, and reduce time business, organizations often fail performance goals may be to market. At the same time, the use of to adequately monitor supply dramatically different from those global supply chains introduces a number chain activities for compliance with at the heart of the cultural, social or economic context in which a of complexities and challenges to an those goals. The lack of adequate oversight can send a message supplier operates. In such cases, organization’s business model. Aside to suppliers that compliance the demands of dealing with from the effort needed to manage a more with stated social performance conflicting values place a supplier complex functional structure, global requirements is optional. in the difficult position of having to supply chains can also require significant choose which values will prevail. investments of time and money to realize • Failure to effectively respond their full potential. to supply chain deficiencies— In an effort to address the challenges of Client organizations often facilitate implementing social performance goals These supply chain challenges are continued non-compliance with across supply chains, client organizations considerably magnified when an social performance goals when and suppliers are increasingly applying organization embraces the concept they fail to respond consistently the principles and practices embodied of corporate social responsibility and and effectively to deficiencies in a management systems framework. seeks to adopt social performance goals among suppliers. As previously This framework provides a clear structure across its entire operation, including its noted, the lack of an effective for implementing and maintaining an global supplier network. Some of the key response by client organizations effective corporate social responsibility challenges facing organizations in this gives suppliers latitude to initiative throughout an entire transition include: ignore social performance goals organization, including supply chain • Lack of clarity in social altogether or to choose only those partners. For suppliers, a management goals they wish to apply. performance goals—A major systems framework can also be an reason for supplier non-compliance • Failure to identify and assess root important capacity building tool that with social performance goals can causes of non-compliance—A can support compliance with a client be traced to the failure of a client consistent and timely response to organization’s social performance goals organization to clearly articulate supplier non-compliance can be while strengthening a supplier’s overall the importance of these goals compromised by focusing only on performance and effectiveness. or their expectations regarding the symptoms of non-compliance performance. In the absence and failing to identify the root page 3 Using Management Systems for Socially Responsible Practices in Supply Chains The Management Management systems are generally • Check—Then, performance data Systems Approach structured in accordance with the steps is evaluated against the plan to assess the results. In this step, The term “system” is generally used to identified in the so-called Deming Wheel the plan or process may also define an interacting or interdependent (see Figure 1), named after the renowned be evaluated to determine its group of items that form a unified whole. quality consultant Edwards Deming. The appropriateness to the stated On this basis, a management system Deming Wheel, also known as the PDCA improvement objective. can be understood as the combination Cycle, consists of the following four steps: of procedures, processes, resources and • Plan—An organization identifies • Act—In this step, an organization organizational structure required to and defines a specific problem. evaluates any gaps between the effectively support an organization’s The planning step also includes planned and actual performance, effort to achieve its performance the development of a specific plan and modifies the plan to close the objectives in a given area. In organizations or process to achieve the desired performance gap. Alternatively, today, management systems are an improvement. the plan can be modified to further improve performance. essential tool in managing performance • Do—In this step, the plan or related to product quality, the process created to address environment, energy usage, health and the problem is implemented. safety practices, and socially responsible Performance data is gathered for behavior. later assessment. 4. Act 1. Plan Institutionalize Identify the improvement problem and continue the develop the cycle. plan for improvement. 3. Study/Check 2. Do Asses the plan; Implement is it working? the plan on a test basis. Figure 1: The Deming Wheel (PDCA Cycle) page 4 Using Management Systems for Socially Responsible Practices in Supply Chains As the cyclical framework implies, the • Accountability and enforcement— scope of socially responsible practices “plan-do-check-act” (PDCA) sequence In cases where actual activity is that they address, they typically cover can be infinitely repeated. This makes it found to deviate from prescribed some or all of the following core areas: an effective tool not only for addressing policies and procedures, • Human rights, including civil, appropriate actions are taken to specific performance issues but also for political, economic, social and address noncompliant activities promoting and sustaining continuous cultural rights improvement efforts. and behaviors. • Labor practices, including These key elements in combination with In addition to the PDCA framework, all workplace conditions and worker the PDCA framework result in a robust effective management systems integrate health and safety issues five key elements, as follows: and dynamic system that supports continuous performance improvement. • The environment, including the • Policies and procedures—An prevention of environmental To support the widespread adoption of effective management system damage

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