Daimler utilizes increased governance for Sustainable Supply Chain

Globalization has increased risk and decreased transparency in the global supply chain. Along with risks for business comes new risks for society at large.

Many organizations have located their supply chains as areas of the value chain where they can impact and improve upon elements related to corporate social responsibility. In turn, supply chains have the potential to have rippling social impact. 

Daimler AG has begun working with supply chain development in relation to sustainability and CSR, but is shifting the perspective of global strategy by localizing their impact. The automaker works in a vertical (Automotive) where the sourcing of raw risk materials, manufacturing in risk-adverse workplaces, and presence of child labor aren’t so far from the norm.

To make an impact where it’s felt most, Daimler has implemented a new governance program based around increasing sustainable development and preventing the violation of human rights in their supply chain activities. Renata Brungger, a member of Daimler’s board of management responsible for integrity and legal affairs. “With several tens of thousands of suppliers, and even more subsuppliers, we need to proceed in a risk-oriented manner. Our human rights respect system provides the systematic foundation for this” (Assembly Mag 2018).

Technology, of course, will play a part in Daimler’s ability to scale projects for better transparency and compliance, but the true key to success will be the localization of the project upon tier-one suppliers. Of course, the real challenge lies in tier two, three and beyond.

Attempting to trace back a supply chain to the origin is an on-going challenge of organizations in risk-adverse industries, but these are the areas where risks typically manifest. By engaging tier-one suppliers, and aligning goals and values, organizations – like Daimler – can create ambassadors to pass along messages of human rights compliance to subsuppliers. This is the essence of localizing and mobilizing sustainable development. 

Shifting perspective towards sustainable development for procurement, sourcing and supply chain organizations is a positive sign for industry, and society, at large. Companies like Daimler are leading the projects and innovations that will soon become the norm within the global supply chain. 

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