Ethical Sourcing – What? How? Everything You Should Know In 2021

As a procurement manager, ethical sourcing is a must. Because we are not just working towards growing our business, but it is also our responsibility. We can all do business without endangering the one planet where we live.

For this article, you will learn all about ethical sourcing. You will define what it is, why it is important, and why sourcing responsibly should be adopted by every company.

By the end of this article, you should now have a strong sense of promoting ethical sourcing. You will be its champion and will consider it every time you create your own procurement process.

Ethical Sourcing – Its Definition Debunked

When you hear the word ethical sourcing, what immediately comes into your head? Does it mean the ability to source the supplies or services a company needs through a legitimate and morally correct process? Or is it just some fancy mumbo-jumbo of words designed to keep the reader’s attention glued towards what this author is going to write next?

Well, we at Procurement Tactics can tell you that it’s not the latter; we are a team of professional procurement managers and trainers who are looking to build the next generation of expert procurement managers. We do like to put into attention our special Negotiation Gamechanger certificate program; it’s designed to give you the edge against your competitors so please check it out before the program closes!

Now back to the topic.  The ethical sourcing definition does mean exactly what is stated above. It is the sustainable and responsible approach to managing your supply chain and sourcing. While most companies nowadays are practicing it, the public also has a lot of organizations who are always keeping a watch on procurement processes to make sure that the sourcing of products, goods, and services are done responsibly and ethically.

Why is ethical sourcing important?

One of the biggest issues with procurement is usually the process is practiced. You’ll hear several distressing news of endangered species hunted for their fur or tusk together with many reports on fraud, corruption, human trafficking, and even modern-day slavery. This list may continue with child labor and other troubling issues.

With ethical sourcing, the source of the problem is taken care of at once because all suppliers that practice cruel and/or inhumane acts of sourcing their materials and products are immediately caught, imprisoned, or banned from ever conducting business again. Companies that practice it are always working together with both local and international organizations at stopping groups and businesses that do not follow the rules.

Ethical sourcing controversies are often looked at by the public so a company that practices it is often boosted by public support. Thus, for a smart procurement manager, practicing sustainable sourcing when looking for a particular supplier or vendor is a smart choice not just for you but for the good of the company as well. Besides, no one wants to buy anything from a company that supplies illegal goods, right?

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Examples of Ethical Sourcing

Some of the best examples of ethical sourcing are often found in companies and organizations that deal with products that come from animals:

  • The Ivory trade ban of 1989 is one great example of ethical sourcing. Due to the rampant hunting and illegal poaching of elephants for their ivory tusks in the 1980s, the Convention on International Trade in Endangered Species of Wild Fauna and Flora or CITES demanded the immediate ban of ivory to discourage companies from all over the world from buying ivory sold by poachers and illegal traders at high prices. Deliberations were made until by 1990, ivory was immediately banned in international trade. The ivory trade ban resulted in the plummeting of ivory prices and the reduction of elephant hunting in Africa.
  • The criticism on several huge poultry, swine, and dairy farms on how the animals are poorly and inhumanely reared and handled gave rise to the term “humane farming”. This also discouraged companies from getting animal products from farms that do not have the label. The same concept is also applied to the production of eggs; nowadays, eggs that come from birds that are naturally fed with grass and not kept in cages are more favored by the public compared to eggs that come from farms that are supposedly using antibiotics to enhance egg production and quality.
  • The ban on plastic straws in the late 2010s is another great example of ethical sourcing. Multi-billion fast-food company McDonald’s promised the public that plastic straws will be phased out from their branches all over the world by 2020. This is because plastic straws are just one of the many plastic refuse that is often seen in gigantic ocean garbage patches. Hence, public demand for the ban of plastic straws was pushed to teach the public to stop depending on the item for their daily soda or drinking consumption. Companies that are dependent on using straws began using other methods, such as metal drinking straws and serving small bottles as drinking glasses.

Ethical Sourcing and Sustainable Sourcing – The Difference?

There is currently a great deal of confusion regarding the terms ethical sourcing and sustainable sourcing. From the way you look at the words, they do look and feel the same. But just like most words, the difference can be seen in their actual meaning. 

While ethical sourcing is choosing your suppliers based on how ethical and responsible they’ve produced or come up with their supplies and services, sustainable sourcing is the process of looking for a sustainable solution to keep up with the demand for a certain product.

One perfect example of sustainable sourcing is the development of synthetic ivory. Companies that wish to avoid getting implicated by the ivory trade ban are buying and using synthetic ivory to dissuade poachers and hunters from hunting elephants, seals, and walruses in the wild for their ivory tusks.

What joins sustainable sourcing and ethical sourcing together though is that both are needed due to supply chains are still going to expand globally into developing countries and are always on the lookout for lower prices. Companies must meet the expectations of their stakeholders to take responsibility for their supplier’s ethical and social practices.

FAQ

What is ethical sourcing?

Ethical sourcing is the search for suppliers who are manufacturing their supplies in a responsible and ethical manner.

How to do ethical sourcing?

Careful planning and data gathering must be used to find the right sources of supplies. Avoid suppliers who have a reputation for procuring their supplies through dubious or unethical means.

How is ethical sourcing different from normal sourcing?

With ethical sourcing, there is great emphasis on the distribution of supplies using ethical and responsible means. With normal sourcing, only the procurement of supplies at a good price is an important fact.

Learn how to use ethical sourcing to your advantage!

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