The topic of ethical sourcing keeps breaking into our awareness, often when a new scandal spreads involving a highly esteemed brand caught sourcing in unethical ways. Recently, it was reported that BMW, Jaguar, and Volkswagen imported vehicles into the U.S. with parts sourced from banned suppliers in China that were suspected of using forced labor. These incidents have significant impacts on brand reputation.

For many customers ethical sourcing and sustainability became an important consideration when making purchasing decisions. In fact, nearly 88 percent of survey respondents said they prioritize buying from companies that clearly demonstrate they have ethical sourcing strategies in place.

In this blog post, we will delve into what ethical sourcing means, explore why it can be quite challenging to implement effectively, and discuss how RFID technology can assist in ensuring ethical sourcing and compliance.

What is Ethical Sourcing

Ethical sourcing refers to the practice of sourcing while ensuring all suppliers and vendors meet the ethical standards throughout the supply chain. This includes environmental impact, fair trade, fair labor practices, and product safety. By doing so, they can ensure that they conduct business with integrity, minimizing exploitation and environmental harm to the greatest extent possible.

The world is just beginning to witness the horrific impact that mass industrialism and mass consumption have brought to the environment and to the unfortunate people who have been exploited in the process. This has spawned a new generation of shoppers and regulators who are more conscious and want to ensure that the businesses they buy from or work with are operating in a genuinely ethical manner.

The Struggles of Ethical Sourcing

I wish I could tell you that sourcing ethically is a walk in the park, but unfortunately, it's easier said than done. When attempting to adhere to ethical sourcing standards, one might encounter these challenges:

High costs

Sticking to ethical sourcing incurs higher costs due to fair wages and sustainable practices. These additional costs can impact competitiveness and eventually profitability.

Lack of transparency

It’s difficult to track and trace all origins of all materials and labor involved throughout the process. In addition, some suppliers may hide unethical practices such as child labor or unsafe working conditions. Moreover, there might be inconsistency in reporting standards across different regions.

Limited availability

Unfortunately, ethically sourced materials and products are harder to find. Not all suppliers can meet the ethical standards, making it harder to find those who can.

Verification and auditing

Regular audits are necessary to ensure ongoing compliance, which can be costly and logistically complex.

How Can RFID Help Source Ethically

RFID technology is well-known for its capabilities and advantages, commonly used for asset tracking, inventory management, and more. However, RFID can also be extremely useful for ensuring compliance with ethical sourcing practices. Here’s how:

Enhanced traceability

RFID tags can track materials and products throughout the supply chain, providing detailed information about their origin and journey. This helps in verifying the ethical sourcing of raw materials and components.

Improved transparency

Real-time data from RFID systems allows for greater supply chain visibility, making monitoring and documenting ethical practices easier.

Streamlined auditing

RFID technology simplifies the auditing process by providing accurate and up-to-date information about the movement and handling of goods, reducing the need for manual checks and extensive paperwork.

Supply chain efficiency

RFID also enhances the efficiency of the supply chain by providing precise data on inventory levels, reducing waste, and ensuring timely delivery of ethically sourced products.

Authentication and anti-counterfeiting

RFID can verify the authenticity of products, ensuring that only genuine, ethically sourced items reach the market. This helps combat counterfeiting and ensure brand integrity.

Regulatory compliance

RFID technology aids in meeting regulatory requirements by providing detailed records of compliance with ethical standards.

Consumer confidence

RFID-enabled traceability can be communicated to consumers, building trust and confidence in the ethical practices of a brand, providing a basis for transparent marketing and ethical branding.

Risk management

Early identification of issues such as labor violations or environmental impact through RFID data allows for prompt corrective action which reduces the risk of reputational damage and legal repercussions.

In conclusion, ethical sourcing is becoming an essential priority for both businesses and consumers. Despite the challenges involved, it is crucial for companies to adopt transparent and sustainable practices to maintain their reputation and build consumer trust. By using RFID technology, companies can overcome many of the challenges associated with ethical sourcing, making it more feasible to implement and maintain ethical practices throughout the supply chain.