“Supplier Code of Conduct” Expectations And Your Business

Supplier Diversity Code of Conduct

Is your small business prepared to comply with supplier code of conduct expectations?

Your firm has just been awarded a contract from a large customer. When the contract arrives, you sign it and the work begins. You may not have noticed, but there was a “supplier code of conduct” attached to or referenced in that contract agreement. By signing the agreement, you agreed to the terms in the supplier code of conduct.

What is the significance of this document?

Your customer prepared its own code of conduct to ensure that its leaders and employees follow rules, principles and values that are based on environmental, social, and ethical issues. In other words, this is a code for ethical decision making within that organization. The electronics industry created a code of conduct that is specific to its sector. Other industries use international standards such as the “International Labor Organization’s Ethical Trading Initiative Base Code.”

When this customer selected your small firm, it wanted to ensure that you are proving safe working conditions and that your manufacturing areas are compliant with environmental and health & safety requirements. This customer expects that your firm will create an appropriate management system to actively review, monitor, and modify your business operations to ensure that your company is diligently trying to adhere to the stipulations in the supplier code of conduct.

Your company may be audited by a group selected by your customer or they may require you to request an audit through one of many organizations that have been established to establish conformance to these supplier codes of conduct. Failure to conform to these supplier codes could lead to the cancellation of the contract.

Confirm If Your Customer Has A “Code Of Conduct”

When you are negotiating with the customer check the website to determine if there is reference to a supplier code of conduct. Many large companies have information or assistance available to help you understand the code and begin to develop practices for conforming. Take time to determine how the document is explained to the organizations stakeholders.

If you cannot find it on your own pay careful attention to any reference to a code of conduct in the agreement before you sign and ask for a copy of the code. You may choose to ask specifically if they have a code of conduct and what is expected BEFORE you sign.

Document these conversations and make sure that you understand the intent of the code. Many customers are encouraging you to continually improve your workplace conditions over time. Some companies sponsor webinars and events that allow their suppliers to ask questions and to share their experiences with these codes.

Take the time to understand the customer’s expectations

Take the time to understand the customer’s expectations for the first year and for continual improvement after the initial implementation. It is likely that your company complies with many of the requirements. However, you will need to be sure that you communicate the importance of these requirements to your employees and to make certain these practices are part of their work instructions; i.e. part of what the workers do every day. You will also need to have objective evidence of your compliance should you be audited.

Next- The successful adoption of a supplier code of conduct

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