Ethical Supply Chain Management

Supply Chain Management is a network of Business and Internal Processes including:

  1. Material flow from suppliers and their "upstream" suppliers at all levels,
  2. Transformation of materials into semi-finished and finished products, and
  3. Distribution of products to customers and their "downstream" customers at all levels

 Depending on the situation, the supply chain may include major product elements, various suppliers, geographically dispersed activities, and both upstream and downstream activities. It is critical to go beyond your immediate suppliers and customers to encompass the entire chain, since hidden value often emerges once the entire chain is visualized.

 Supply Chain Management

One aspect of Supply Chain Management that was not addressed in the course was the ethical decisions for large companies to assure that their raw materials especially those termed "Conflict Minerals" are coming from a reputable source.  The recent passage of provisions on conflict minerals from eastern Congo in the Dodd-Frank Wall Street Reform act has brought unprecedented attention to the linkages between trade in minerals crucial to electronics and other industries and the ongoing conflict in third world countries.     This legislation is just one step toward conflict-free products and a minerals trade that benefits the Congolese people. Achieving this will require a combination of companies, governments, and consumers taking action to trace, audit, and certify their minerals supply chain:

  • Trace: Companies must determine the precise sources of their minerals. We should support efforts to develop rigorous means of ensuring that the origin and production volume of minerals are transparent.
  • Audit: Companies should have detailed examinations of their mineral supply chains conducted to ensure that a) minerals are not sourced from conflict mines; and b) no illegal taxes/bribes are paid to armed groups in Congo. Credible third parties should conduct or verify these audits.
  • Certify: For consumers to be able to purchase conflict-free electronics made with Congolese minerals, a certification scheme that builds upon the lessons of the Kimberley Process will be required. Donor governments and industry should provide financial and technical assistance to galvanize this process.

In addition to these steps, there are other important contributions that companies should make. Electronics, jewelry and minerals companies should partner with donors to set up a miners' livelihood fund to offer them real opportunities and help the Congolese economy through small business, microfinance and agriculture.  

Please feel free to contact CLI today.