Safe Supply Chains Help Produce Sustainable Businesses

While international supply chains have created tremendous business opportunities for companies, they have spurred great risks, too. It is no longer enough for organizations to manage their own exposures. They should be equally concerned with their suppliers’ exposures – especially their suppliers’ supply chains. “An organization can be directly impacted by their primary and sub-tier suppliers’ performance, operations, environmental practices, labor force treatment or workplace safety,” said Linda Conrad, director of strategic business risk management for Zurich Services Corporation and contributor to Companies face major financial and reputational risks if their operations are interrupted by, or even associated with, supplier negligence in a multitude of areas. Supply chain safety is one such area gaining attention, as safety violations, preventable industrial accidents and mistreated laborers can result in costly fines, company downtime and negative news coverage that can impact profitability.

“Companies put the value of their brands at stake when they fail to abide by society’s expectations that they will act as good corporate citizens,” Conrad said. “When a major organization’s supplier or supplier’s partner is exposed for unsafe or unethical practices, it’s typically the outsourcing organization that faces consumer backlash.”

More companies are implementing comprehensive corporate social responsibility or corporate sustainability programs that address everything from reducing energy use and waste to monitoring worker safety throughout their entire supply chains — both upstream and downstream, said Steve Ludwig, safety programs manager for Rockwell Automation, which sponsored the paper. “Companies should expect their suppliers to abide by the same product quality, environmental and worker safety standards that they follow, regardless of location,” Ludwig said. “Simply selecting the lowest cost supplier and closing your eyes to how they produce their product is no longer acceptable.”

While supplier worker safety is only one component of corporate sustainability programs, it is an important one. Every year throughout the world, approximately 337 million people are victims of work-related accidents, and more than 2.3 million people die because of occupational injuries or work-related diseases, according to information from the International Labour Organization.

For more about how to recognize risk and monitor supply chain safety, read the Zurich American Insurance Corporation white paper, “Safe Supply Chains Help Produce Sustainable Businesses.”

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