University of Tennessee

Running a Supply Chain Ethically and Sustainably Is a Journey, Not a Destination

November 30, 2021

The complexity of modern supply chains poses stern challenges to corporate sustainability commitments. A company’s environmental and social values are only as strong as the values of its supply chain partners and breaches of integrity are not uncommon, especially in times of stress. The pandemic has exposed this problem in many industries. COVID-19 outbreaks in garment factories, for example, violated fashion brands’ public promises to protect employee health and safety.

If supply chain integrity (SCI) is defined as an end state – one you either achieve or don’t – managers face a mountain too tall to climb, say a new study’s authors, including John Bell, Niedert Professor of Supply Chain and head of the supply chain management department at the University of Tennessee, Knoxville’s Haslam College of Business.

“That all-or-nothing mindset causes business leaders to pit profit and sustainability against each other, opening the door to even bigger disconnects between values and culture,” Bell says. He and the other researchers say SCI must be understood as a process rather than a single destination. Their study offers a blueprint for making that cultural shift.

Translating the 7 Cs

The study integrates the supply chain integrity concept into a process model that managers can use to align values and actions throughout the supply chain. A key piece of the authors’ work was translating researcher Thomas Maak’s well-known “7 Cs” of corporate integrity into a supply chain context by examining the commitments and actions of three manufacturers and three retailers with consistently high rankings for corporate reputation (as measured by the Axios Harris poll). They analyzed publicly available data to refine the 7 Cs for SCI:

  • Commitment means resolving to meet relevant customer needs and addressing customer challenges through products and services. For SCI, a firm’s commitment expands to include engaging all stakeholders and suppliers to ensure environmental and social responsibility.
  • Content involves specifying guiding principles for ethical and responsible behavior and applying those to supply chain partners.
  • Coherence is shown by sticking to principles – or taking on proactive upfront costs to support them – even in times of adversity or after experiencing external shocks. (Firms’ responses to COVID-19 were a key way of evaluating coherence.)
  • Context is drawn from actively seeking out like-minded supply chain partners to become bound to common standards of ethics.
  • Conduct requires specific practices to carry out guiding principles. These practices may be preventive or corrective.
  • Consistency is demonstrated by doing what you say you’re going to do and effectively achieving expected outcomes.
  • Continuity is expressing an enduring dedication to ethical and responsible behavior, reflected in efforts that require years of steady progress to achieve goals.

Creating a Process Model

Taking a closer look at the 7 Cs from the perspective of the focal firm in a supply chain, the authors found that a process view emerged. An ethical and responsible supply chain starts with the firm’s commitment to a purpose beyond profit. The firm develops content that reflects that commitment, drawing on existing standards, laws, regulations, sustainability guidance and engagement with external stakeholders.

The firm then chooses supply chain partners, providing context. However, partners may not initially be aligned on common principles; the firm may need to encourage or push them in the desired direction with conduct. Doing this successfully and achieving set goals demonstrates consistency – a key indicator of SCI, since conduct alone can be ineffective.

After context is created, feedback loops exist between the remaining stages of the process that can encourage improvement and correct misalignment. The coherence element serves as an important ethical safeguard at every point of interaction, especially when a shock hits the system and threatens consistency and continuity. Coherence can be considered the framework that discourages firms from trading away ethical practices for short-term gains.

By defining these process components of SCI, the study gives managers a clearer understanding of how an ethical and responsible supply chain can be achieved. It also identifies spots to target when the system isn’t producing the expected outcomes. This tool can help firm leaders break away from an all-or-nothing SCI mentality, giving them a way to align values with culture over time and influence partners across the supply chain to become more sustainable.

The research paper, “Journeys, Not Destinations: Theorizing a Process View of Supply Chain Integrity,” by Matthew A. Douglas (Baylor University), Diane A. Mollenkopf (University of Canterbury, New Zealand), Vincent E. Castillo (The Ohio State University), John E. Bell (The University of Tennessee, Knoxville) and Emily C. Dickey (Kühne Logistics University, Germany), was published in Journal of Business Ethics, 2021.

CONTACT:

Scott McNutt, business writer/publicist, rmcnutt4@utk.edu