27 Nov Ethical sourcing is simply good business sense
When it comes to ethical product sourcing, the benefits go well beyond the warm fuzzy feeling of giving back to the world. It may just seem like another trending term, but if you’re looking for a way to provide some differentiation for your brand and improve your bottom line, a little corporate social responsibility (CSR) might be just what your business needs.
What is ethical sourcing? Sourcing ethically means ensuring key labour standards are met throughout your entire supply chain. This includes no underage workers or forced labour, clean safe working conditions and environmentally sustainable harvesting and manufacturing. An ethical sourcing policy can seem like a grand undertaking for some businesses and simply a “nice to have”, however it is generally much easier than most would imagine and can be implemented gradually in small steps.
Ignoring this growing trend and not developing an ethical supply chain can ultimately cost a business many times more than the small amount of extra effort that sourcing ethically takes.
Sourcing ethically can ultimately improve your bottom line in a number of ways:
Capture and hold market share
It is no secret that social media has radically changed the way people absorb and share information that impacts purchase decision making. This has had a major influence on businesses in most industries. Establishing a strong positive brand identity is critical when consumers have access to so much information from so many different businesses.
A global study by Nielsen revealed that 55% consumers are willing to pay more for goods and services provided by a company that is committed to positive social and environmental impact. “Consumers around the world are saying loud and clear that a brand’s social purpose is among the factors that influence purchase decisions,” said Amy Fenton, Global Leader of Public Development and Sustainability, Nielsen.
For any business hoping to distinguish itself in a highly global market place, sourcing ethically is a low cost and beneficial way to develop a brand that consumers can identify with and reflects their views. Developing a brand built around ethical sourcing can be a great way to capture and hold on to market share.
Better stakeholder relationships
Improving your image for your consumers is a start, but you should never neglect employees as major stakeholders of your business. Employees are often the most important resource of a business, meaning increased loyalty and motivation should be a constant target for any company. A study by International Centre for Corporate Social Responsibility (ICCSR) found that CSR focused policies had a major impact on motivation and loyalty of consumers. Building brand and engaging in work that employees can be proud to associate with can go a long way and shouldn’t not be ignored.
Relationships with your suppliers also improve when a ethical sourcing policy is implemented. By taking the time to work with your suppliers on ethical policies, it shows that you are interested in developing a long term business relationship. This hands-on approach leads to better quality standards and replaces a buyer-supplier relationship to more of a partnership approach. This will cause a fall in product failure rates and an ultimate cost advantage over competitors.
The bottom line
Sustainability in business is becoming increasingly important and there are real benefits that can impact your bottom line. Sourcing ethically will help you gain more dynamic branding as well as improved relationships with your employees and suppliers.