Supply Chain Management

Definition

A product's supply chain is the flow of people, resources, goods, information, and funds from the initial procurement of raw materials to the final consumer. Supply Chain Management is the planning and controlling of this supply chain. Integrating CSR into supply chain management has recently become a prevalent issue.

Supply Chain Management is most often associated with the implementation of IT systems or improvement to business processes or logistics with the goal of improving management efficiency. However, as supply chain become increasingly globalized and as worldwide attention focuses on environmental and corporate social responsibility (CSR) issues, governments and corporations are paying more attention to "CSR Supply Chain Management" that incorporates "green procurement" (environmentally sound procurement practices) and "CSR procurement" (procurement conditions and management that is in line with CSR principles of human rights, labor, security, sanitation, environmental protection, fair trade, corporate ethics, quality and safety, consumer protection, and local contribution) *1. As supply chains branch out across the globe, companies are required to comply with the regulations of each of the countries in which they operate, and the branching out of supply chains across the globe is giving rise to enforcement of strict global regulations. Strict environmental regulations are being adopted, particularly in Europe,

such as the Restriction of Hazardous Substances (RoHS) and the Waste Electrical and Electronic Equipment (WEEE) directives. Rising consumer awareness and the increasing influence of international NPOs are also exerting an influence. Consumers are becoming increasingly concerned about the "origin" of products, and NPOs are expanding their corporate monitoring activities to an international scope.
NPO efforts to discover and report inappropriate labor conditions and "sweat shops" under a company's aegis in developing countries have even resulted in widespread product boycott campaigns by consumers. In response to this movement, companies and industry groups are implementing "codes of conduct" for suppliers and including guidelines related to environmental, labor and human rights issues into the procurement processes in addition to the standard requirements related to product quality and delivery. Companies are also implementing various other measures to improve their supply chains from a CSR perspective, including recording and issuing audit reports of supplier activities and compliance, monitoring and conducting interviews, and holding explanatory meetings and training sessions *2.