Businesses are constantly relying on suppliers to reduce overall costs, while improving the quality of their goods or services. Many North American companies have downgraded the volume of suppliers they do business with, and award contracts to a select few, in order to lower operating costs. By establishing a strong supply chain, companies are able to push for continuous quality improvements, and price reductions. The long-term benefits of the listed above create a better value for stakeholders.
Some multi-national companies like General Motors can shift suppliers, if a lower offer is made by the competition. As a result, competitiveness, and greater profits are created, in turn contributing to a stronger market
The strategic use of supplier relations can benefit single, double and triple bottom-lines. Corporations excelling in supply relations include Wal-Mart, Ford, General Motors, Toyota and Nestle. All companies listed above have gained tangible results through the practice of ensuring sound supply chains, and sourcing materials from ethical sources.
Emphasizing the importance of practicing CSR to suppliers, researching their existing supply chain, and sending out CSR check-sheets to existing suppliers is important to staying on-track of a company‘s implemented CSR activity.
Overall, there is still a limited understanding about the consequence of a buying company’s perception of a supplier’s reputation in a Supply Chain Management. In the context of CSR, some researchers noted that CSR initiatives positively affect a company’s corporate identity and that the assurance of a responsible upstream supply chain positively impacts its reputation as a reliable business partner. Reputation itself is considered an intangible asset and is defined as the buyer’s perception of the supplier in terms of fairness, honesty, and concern about the buying firm. As an intangible asset, reputation can be a source of competitive advantage, resulting in reduced uncertainty in buyer-supplier relationships and leading to superior financial performance.
Extended to the context of CSR in supplier-buyer relationships, it is very essential that a buyer’s perception of a supplier’s ethical behaviour is maintained. A healthy and positive relationship with supplier is critical for a positive link between CSR and performance, and that an enhanced overall reputation. There are few tangible mechanisms in supply chain management such as certifications or responsible purchasing practices to signal controllable CSR credentials to their corporate clients.
