MIGHT YOUR SUPPLIERS BE BREAKING YOUR PROMISES – AND DO YOU KNOW WHICH ONES? Posted at: June 15, 2017 Posted in: All What is the cost of the loss of trust to a business? A brand represents values and building it successfully represents a promise to your customers about the level of service or quality of products your provide. Break this promise and you damage your brand. In some instances, the results can be extremely costly, such as Samsung’s spontaneously combustible Galaxy 7 handsets, or VW’s emissions test cheating. However, one vital area of reputational risk is in how businesses manage their supply chain, and whether their suppliers’ values match their own. Corporate Social Responsibility A Nielsen survey in 2014 reported that more than half of online consumers around the world said they were willing to pay more for products and services from companies demonstrating social and environmental responsibility. Increasingly, people are making values the driver when they choose who to do business with and buy from. Companies must legally comply with various regulations governing modern slavery, data protection, conflict minerals and anti-corruption, etc. This compliance should help them demonstrate their corporate social responsibility, or CSR, to customers and potential employees. However, they must also be aware of the same compliance within their suppliers and outsourced services. Because, ultimately, the reputational risk is to themselves. Your suppliers must comply with not just the same legal requirements but with your needs as a business. If a brand’s marketing makes certain claims, amounting to a promise of certain standards to customers, then it must be able to back them up. Using third party suppliers failing to meet the same standards, or failing to comply with legal requirements risks blasting a huge hole in a brand’s carefully built reputation. In an age of widespread social media activity, suppliers failing to meet ethical standards quickly becomes the sort of story that goes viral. The negative implications for a brand are huge. Acting Responsibly Managing reputational risk means managing your supply chain. It means choosing suppliers whose values match your own, and being thorough in checking not just the first tier of the supply chain, but further along it. Some organisations go down to third tier suppliers – whilst other organisations have been brought to their knees by problems in suppliers as low as the seventh! Who is supplying your suppliers? The ethical implications can be extensive.
