MANAGING REPUTATIONAL RISKS OF GLOBAL SOURCING Richard J. Coyle In - - PowerPoint PPT Presentation

MANAGING REPUTATIONAL RISKS OF GLOBAL SOURCING

Richard J. Coyle

In affiliation with Kreab & Gavin Anderson richardcoyle@cox.net August 17, 2010

Global sourcing relationships have come under intense scrutiny by non-governmental

• rganizations (NGOs) and socially responsible

investor (SRIs) groups. Some want to improve working conditions, while others simply want to make a name for themselves and attract more funding. Still others are funded by external interests with the goal to destroy corporate reputations.

INTRODUCTION

KNOW WHOM YOU ARE DEALING WITH! DON’T BELIEVE WHAT THEY SAY...PAY ATTENTION TO WHAT THEY DO!

If confronted with allegations, establish a single point of contact for the media and begin your own investigation. Form an internal team with the legal, corporate communications, ethics, purchasing, and investor relations departments. Notify the factory and the supplier to refer all inquiries to the single point of contact.

WHAT TO DO

• Who is claiming to be the author? How large is the
• rganization? Where does their funding come from?
• Analyze the quality of writing. Does it flow like a

native speaker of English wrote the report?

• Study the pictures. Show them to buyers or

auditors who are familiar with the facility. Are they accurate? Do they look staged?

• Take note of the sources for statistics. Are they

credible, and can they be verified? Are the authors citing data which is not available to the public?

QUESTIONS TO ASK

Obtain a complete history of purchase orders and shipments for the factory. Become familiar with what was ordered and the timing of the shipments. Do they match what the report claims was being made and the time frame of the alleged violations?

CHECK YOUR PURCHASE ORDERS

Review previous audit reports for the

• factory. What were the commonly found

violations? Are they repeated in the new report? If the factory has received stellar reviews in the past, the findings in the new report could be fabricated. It could also mean, however, that the previous auditors were paid off to mask serious violations.

CHECK PRIOR AUDITS

Get an investigative team dispatched to the factory immediately with a copy

• f the report. Can the conditions in

the report be readily observed? Do the photographs look like the factory? Do the workers interviewed in the report really exist? Do the records support the claims?

INVESTIGATE THE CLAIMS

If the claims cannot be substantiated, prepare a statement for the media to be used for any follow-up

• stories. If the claims prove to be legitimate, swift

remedial action is needed. Your company reputation can be enhanced by working with factory management to rectify the problems.

TAKE PROMPT ACTION

You should also assess whether local government or law enforcement can assist. Caution: Local officials can often be very corrupt.

ENLIST LOCAL ASSISTANCE

Keep a cool head. Some activists will intentionally try to get under your skin with outrageous allegations. They are focused on achieving a political goal, and their actions should not be considered as personal.

STAY FOCUSED AND CALM

FUTURE HORIZONS

Future debates regarding social and environmental concerns will move from the factory floor to where raw materials are harvested:

• Cotton
• Wool
• Cocoa
• Palm Oil
• Sugar
• Seafood
• Minerals
• Timber