3PLs, Tech Providers Empower Ethical Supply Chains

Photo courtesy of DHL

Because they are so busy watching their margins, shippers do not always spend adequate attention and resources on the ethical issues involved in their highly complex supply chains, notes Mark Smolik, vice president, general counsel and secretary, compliance officer for DHL Supply Chain, the logistics division of Deutsche Post DHL.

Ethics, however, is a dangerous place to cut corners, as increasingly “customer purchasing decisions are made by people seeking to do business with suppliers that uphold and promote high ethical standards in everything they do,” Smolik says. A company can suffer severe brand damage when ethical issues along its supply chain become exposed.

An ethical supply chain encompasses myriad challenges, including corruption, workplace conditions and safety, human rights, labor laws, and sustainability. Third-party logistics (3PL) and technology providers can help shippers manage the supply chain’s many potential ethical risks.

Shippers sometimes prefer to manage compliance-related work in house and keep 3PLs focused on moving products, but “in a perfect world we would see both sides come together to leverage best practices and make sure effective controls are in place,” Smolik says.

3PLs provide a unique perspective and expertise on ethics compliance to shippers, helping companies conduct due diligence and operate compliance programs that prevent abuses. “3PLs with the appropriate discipline and infrastructure have the experience that comes from repeatedly shipping in and out of a particular jurisdiction,” he adds. “They understand what’s expected in that area, what’s expected from the regulatory environment in which they operate, and what they need to do to comply,” Smolik says.

Technology providers also give shippers the tools to better navigate the supply chain’s ethical minefield. For instance, Citizens Reserve’s SUKU platform, which uses blockchain to create one location where cross-continent business partners can communicate and track product location and status, is designed partly to make ethical challenges more manageable.

Even companies that prioritize ethics can struggle to maintain a clear, accurate view of the practices and principles of each partner in a global supply chain. SUKU works to bring those partners into sharper focus.

—Tom Gresham