Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.3.2 SCoC — The Supplier Code of Conduct: Economic Opportunities for Social Commitment of Sustainable Supply Chains

Intended learning outcomes: Disclose the term “double bottom line”. Produce an overview on ethical standards, or code of conduct (CoC). Differentiate between groups of company-internal ethical standards and groups of company-external ethical standards. Present the supplier code of conduct (SCoC) and the certificate of compliance.

A more limited approach as compared to the triple bottom line is called the double bottom line. In the area of the environment, the two terms overlap somewhat. But the point of view is not always the same.

The term double bottom line is about what business or supply chains contribute toward positive social effects.

Some companies see the double bottom line as a marketing approach, in that it gives donations and gifts that foster the development of a community that lives in the environment of the company or is affected by the emissions of the company. This way of proceeding can be useful for the company, which through this purchased reputation can then enlarge or retain its customer base. If the object is to divert attention away from poor treatment of employees or a minority of local residents, this cannot be viewed as anything different than a salesman who uses bribes to push through his goals.

This understanding can be seen in any case as a side effect of business activity. For the customers should actually be won over by the core activity of the company, its products and services. Social commitment in the primary business activity — that is, in the manufacturing, sale, and disposal of products or services, means rather adhering to ethical standards.

Ethical standards are a set of guidelines, or a code of conduct (CoC), for impeccable conduct by professionals.

These standards can be summarized in groups. Figure shows company-internal ethical standards, and Figure shows company-external ethical standards. They were taken from [OeNa10].

However, it is not enough for companies to draft and implement ethical guidelines in their own company. The ethical standards must also be maintained upstream from the company in the supply chain. Particularly, in low-wage countries, this is not a matter of course, as examples in recent years have shown, such as the raw materials from areas of civil war in the Congo or in West Africa, the coal mine disaster in Dongfeng, or toy manufacturer Mattel’s problems with toxic materials.

Fig.        Groups of company-internal ethical standards.

Fig.        Groups of company-external ethical standards.

A supplier code of conduct (SCoC) outlines expectations regarding ethical standards for direct suppliers.

A certificate of compliance is a supplier’s certification that the supplies or services in question meet the specified requirements ([ASCM22]).

In addition to the four groups of standards above, the SCoC contains a fifth group, which describes the aspects in meeting the expectations of the buyer company. An important aspect that can be easily forgotten is that the SCoC also applies to the supplier’s suppliers, that is, further upstream in the supply chain.

Course section 3.3: Subsections and their intended learning outcomes