Earlier this month Omega hosted a webinar, in conjunction with the American Apparel and Footwear Association (AAFA), on the challenge of commercial corruption within supply chains. Omega described the risks brands and retailers are most exposed to and the necessary controls they should implement to mitigate them.
A common mistake made by supply chain executives is believing that associates are either corruptible or incorruptible. This is based on the mistaken notion that ‘good people’ are beyond reproach and misunderstands human nature.
As codes of conduct become more established, suppliers and employees find new ways to circumvent the rules. Soft loans are now being offered by suppliers in place of traditional bribes.
While incidents of bribery remain the most common form of supply chain corruption, employees holding conflicting business interests is an ongoing challenge. Consumer brands and retailers, operating sourcing offices in China, are at particular risk.
Consumer brands and retailers have clear protocols governing unethical supply chain practices within their own organizations. However, very few have equivalent procedures for managing cases of bribery involving external partners. This is a major blind spot.
The pervasiveness of bribery in supply chains is not always fully understood by those without business experience in Asia.
Supply chain fraud and corruption affects everyone. On a micro level, it results in poorly qualified suppliers becoming part of your network, factories with egregious ethical issues becoming approved and defective shipments passed.