IEH - Ethical Trading Initiative Norway

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Identify risks and improvement opportunities

You need to know your supply chain to be able to promote ethical trade. This means that you have to know where your goods are actually produced, and how the conditions are at the production site.

As a member of IEH- Ethcial Trading Initiative Norway, you have access to advice and guidance, and a range of resources and tools in addition to those available on our open pages. IEH is an arena for network-building, and a meeting forum. IEH also offers courses and seminars, and capacity-building for your suppliers. Read more about the benefits of being a member in IEH.

How to proceed:

  1. Map the supply chain
  2. Conduct  a high level  risk assessment of your supply chain
  3. Conduct a detailed risk assessment and identify areas for improvement for the individual supplier

1. Map the supply chain

This basic exercise is essential for gaining an overview of where the goods in your supply chain are produced.  

Draw a supply chain diagram using the following information:  

  • In what countries are the goods produced?
  • Where in the country does production take place?
  • What do you know about your suppliers’ main sub-suppliers?  
  • Where do the raw materials originate?

Other relevant information to include:

  • When do you have direct contact with the supplier?  
  • When do you purchase goods via an importer or agent?

2. Conduct an overall risk assessment of your supply chain

Once you know where your goods are produced, the next step is getting a picture of the risk of poor working conditions in the countries and regions from which you import goods. How likely is it that you will discover cases of child labour, forced labour, workplaces that are detrimental to employees’ health and starvation wages in the production of your goods?

Having this information makes it easier to prioritise. In your efforts to promote ethical trade, you should give priority to suppliers based in countries where there is a high likelihood of poor working conditions, rather than to those based in countries with adequate labour legislation and where the authorities also ensure compliance with this legislation.

There is a risk of poor working conditions in all sectors, but some are known to be worse than others. The agricultural sector and the extractive industries, for instance, should always be categorised as “high risk”.

3. Conduct a detailed risk assessment and identify areas for improvement for the individual supplier

The next step is to obtain and systematise detailed information on the working conditions of the suppliers you have decided to follow up.

You should focus your efforts on operations where working conditions are worst. At the same time, it makes sense to follow up the suppliers where you have most influence. This is where the chances of achieving results quickly are greatest. It is often the case that small and medium-sized enterprises use the same suppliers for many years and in that way develop a relationship of trust with those suppliers’ management teams. These relationships form a good basis for achieving improvements.

It is useful to know whether a supplier has other customers who are also concerned with working conditions and whether a supplier has audit reports and completed self-assessment questionnaires available for you to review.

Use self-assessment questionnaires (SAQs)

Self-assessment questionnaires may be targeted towards either suppliers or agents. Self-assessment questionnaires for suppliers include detailed questions on various aspects of how the supplier deals with working conditions – such as health, safety and the environment (HSE), child labour, working hours and employment contracts. They also include questions on whether the supplier has other customers that have guidelines for ethical trade, and whether there are any reports on working conditions that have been drawn up by external experts (read more about such reports on page XX). Agents and importers are asked how they follow up their supply chain with a view to improving working conditions in suppliers’ operations. The SAQs are based on the suppliers’ own responses, and the responses must therefore be assessed in this light.

The SAQs can easily generate a great deal of information for you to process and organise. We recommend using an IT tool to systematise the information you obtain, as doing this is both effective and saves time. Such programs already exist and are readily available.

Use your eyes

When visiting your suppliers, set aside time to tour the facilities. You will no doubt get an initial impression of the working conditions, however in order to get a complete picture it is imperative that you have the appropriate language skills and cultural awareness.  

Some points to be aware of when visiting a supplier:

  • Are the emergency exits unobstructed, and are fire extinguishers provided?
  • Is there adequate ventilation and lighting?
  • Does the factory look tidy?
  • Do the living quarters, canteen and toilets look clean?
  • Do the workers have the necessary protective equipment?

SA8000

SA8000 certification means that external experts have certified that the supplier’s working conditions are in accordance with the SA8000 standard – the most widely-recognised certifiable standard for decent working conditions. The SA8000 standard covers all of the key requirements relating to labour conditions as set out in UN and ILO conventions.

Read more about SA8000 at http://www.sa-intl.org/

Use of external experts

One means of obtaining information about a supplier’s working conditions is to commission experts to conduct a compliance audit, i.e. an on-site evaluation of supplier performance in relation to your policies and expectations. The experts may be from either local organisations or consultancy firms. Their reports can be based on interviews with workers, physical observations, meetings with factory managers and document analysis. If the workers are organised into one or more unions, the experts should have a meeting with the employee representatives. See the figure below/page x for more details on the components of an audit.

Before you initiate an audit, you should check whether your supplier has had an audit conducted by another customer and whether the audit report is available to you. Suppliers often receive requests to conduct audits from several of their customers and have to spend a great deal of time assisting audit inspectors, often at the expense of their management duties. By sharing audit reports both you and your supplier can save time and money.

Compliance audits do not in themselves lead to better working conditions. Audits provide a basis that must be followed up by concrete improvement measures. You should therefore ensure that the experts you engage can both identify weaknesses and propose improvement measures. There is no point in using resources on audits that are not designed to lead to improvements – either for you or for the supplier. You must also ensure that those carrying out the audits and preparing the audit reports have a thorough knowledge of local conditions and culture, and can speak with the workers in their own language. In order to ensure openness and the best possible information, interviews with the workers should be carried out without the managers present and in such a way that the workers do not risk reprisals.

Should the time for the audit be agreed with the supplier?

It is often argued that audits carried out without prior notice are the only way to reveal true working conditions. This view is based on the notion that suppliers are fundamentally unwilling to improve working conditions and thus have to be forced to make any improvements. However, a supplier who regards decent working conditions as a competitive advantage also sees the point of ensuring that a survey gives an accurate picture of where the problems lie.

Unannounced inspections may be seen as a provocation, undermining the confidence between you and your suppliers. Moreover, a visit of this kind may not be very fruitful if management is not present or if necessary documentation is not made available. On the other hand, the danger with pre-announced inspections is that the supplier has had an opportunity to tidy up, adjust documents and instruct workers to give “correct” answers. Therefore, unannounced inspections might be a good idea if you suspect that the supplier is being less than forthright.

New suppliers

When searching for new suppliers, you have an opportunity to find suppliers who prioritise decent working conditions. This will save you a great deal of work and at the same time help suppliers to turn decent working conditions into a competitive advantage. Use the checklist below to see how potential suppliers score in relation to your requirements. You can also check whether the supplier has SA8000 certification. If they do, this means that the supplier is certified in accordance with the most widely recognised certifiable standard for decent working conditions.


Resources - Assess:

Below is a selection of resources and tools associated with the mapping and identification of risks in your supply chain. A membership in IEH gives you access to more resources and tools in addition to ongoing counseling and follow-up in your work with ethical trade.

Do you need guidance? Become a member of IEH!

Do you need guidance? Become a member of IEH!

Would you like to know more about membership of IEH? Or perhaps you would like to arrange a non-binding meeting? Please contact us.


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