Does your vendor know your supplier’s code of conduct? If yes, it proves that you will establish long-lasting relations with the suppliers and that your organization follows basic business standards. But, if you and your supplier do not share a collaborative approach to the code of conduct, there are chances that you may have disputes in the future over certain things, which will not only spoil your reputation in the business industry but also cost you a considerable loss. So, whether you are a well-established business or a startup, you must set a code of conduct for your suppliers and implement and audit them.

Are you a startup and need to learn how to create a supplier code of conduct? No worries! In this blog, we will explain each step in detail. So, let’s start.

What is A Supplier Code of Conduct?

A code of conduct for suppliers is a set of rules and regulations that you set for them to follow. This ensures that suppliers meet the expectations and have the same ethical and business values for which you strive. You mention ethical, environmental, anti-corruption, and moral values.

Importance of Code of Conduct

Communicating with suppliers about your organization’s social, ethical, behavioral, and environmental values is essential. The code of conduct helps to maintain an element of respect and integrity between the supplier and you. It binds both parties to work according to the regulatory compliance and standard safety codes and helps to resolve the issue in case of breaching these regulatory codes. The code of conduct simplifies your expectations from the suppliers and the procedure to meet these expectations. It made the suppliers aware of your company’s environmental, ethical, and social policies and compelled them to work for mutual success through these policies. Moreover, a code of conduct sets you as a leader in your industry. It signifies that you follow the standard labor laws and care for environmental factors and social issues.

What should be included in the Code of Conduct for suppliers?

The code of conduct should have each component that you want to follow by your supplier. It may vary from company to company, location to location, but few components are the same worldwide that are given under

Regulatory Compliance And Standards

You should mention all the regulatory compliances and standards in your organization. Moreover, it would help if you mentioned that the supplier will follow all the standard regulations of the area in which you are operating.

Labor/Human Rights

It would help if you mentioned that all labor and human rights would be implemented on the supplier when working with you. For Example, Fair wages according to the working hours, no child, and forced labor are acceptable. Moreover, suppliers should follow fundamental human rights such as respect and dignity of all the crew involved in the working procedure, including labor, employees of your organization, contractors, subcontractors, and procurement managers. Moreover, it strictly mentions that human trafficking is also not acceptable.

Data Security

Your data is your intellectual property. You should mention clear rules for the security of your data. This clause of the code of conduct requires the supplier to follow data protection laws, and he needs your permission before sharing your data with anyone. In case of any security breach, you can take action.

Anti Corruption Rules

Organizations must mention the anti-corruption rules in their code of conduct for the suppliers. When dealing with you, the supplier will not be involved in corruption or bribery, a fair competition environment without favoritism, and receiving gifts. The most important thing is not to interfere with official government affairs through bribes.

Sustainable practices

Mention that the supplier will follow sustainable practices where possible. They will use sustainable resources with less environmental effect, properly dispose of waste materials, and use less water. In short, they will follow all the practices that are

environment friendly and avoid all those procedures that are harmful to the environment.

Safety Rules

It would help if you mentioned that your supplier would follow the rules for the safety of labor, employees, and everybody working on the manufacturing site. They must have the necessary protection kits and facilities at the site location to deal with any emergency or danger.

What to Consider Before Writing Code of Conduct for Suppliers

Drafting a code of conduct is the most essential part of your business. It is not a piece of paper; instead, it contains the details that show your organization’s position in the industry and set you as a leading example in your relevant industry. Therefore, give proper time to code of conduct. Before you start drafting, a few things should be finalized.

Who will be on the team to draft a code of conduct?

A code of conduct is the basis for your long relationship with suppliers. Therefore, choose the team wisely. You can also set your code of conduct. Two strategies are followed for this purpose in renowned organizations.

• Higher management forms the code of conduct, and then the company’s trusted and loyal employers review it and suggest changes.
• Higher management nominates some old employees, stakeholders, and higher management officials from the organizations, who form a code of conduct.

Write Down All Past Issues

Before writing a code of conduct, highlight all past issues your company has faced and write them on paper so that you can build a strategy and add them to your code of conduct to address them this time. A pro tip here is to observe and research what other companies face when dealing with the suppliers, write them down, and mention them. Another tip is to check the history of the supplier with whom you plan to work and check the issues that must be resolved.

Create An Outline of All Issues Which You Want to Mention

Once you have found all previous issues, outline, and share them with the stakeholders, ask them for suggestions on how to cope with these issues for this time, and establish a friendly, long-lasting relationship with the supplier.

Now, you are ready to draft the final document. Here is the step-by-step guide to creating the final code of conduct.

Identify the Scope And Objectives

First of all, identify the scope of the code of conduct. For example, what do you want to get by implementing a code of conduct? Who is the targeted audience? What are your means to communicate with the suppliers and vendors, and how effectively can you implement this code of conduct?

Compare Your Organizational Value to Others

Access your organizational values and compare them with your competitors. Conduct a thorough analysis of your practice against industry standards and your competitors, and find out the areas that need your immediate attention and improvement so that you can highlight them in your code of conduct.

Clear Communications And Transparent Expectations

Communicate and mention the suppliers’ expectations. Those may be regulatory codes, behavioral, environmental, or related to labor and human rights. One thing to say here is that transparent communication is optional with the supplier only; instead, communicate with the stakeholders, your employees, and organization management to draft a better code of conduct, ultimately enhancing the supplier’s work performance and improvement.

Develop Monitoring Setup

Develop a monitoring setup and mention it in the code of conduct so your employers, stakeholders, and suppliers know that you have a fair process for implementing and monitoring the code of conduct and that strict action will be taken in case of any breach.

Draft the Code of Conduct

Now that all the essential steps have been completed, it’s time to write a code of conduct with clear guidelines and instructions. Always write the code of conduct in easy and understandable language. Start with the introduction, then a comprehensive approach to the code of conduct, and finally, the conclusion paragraph.

Review And Finalize the Draft

Always review your draft and make the necessary changes before finalizing it.

Publish And Distribute

When your draft is ready and has approval from management and stakeholders, it’s time to publish it and distribute it to the stakeholders and suppliers.

Implementation of Supplier Code of Conduct

It is possible to implement a code of conduct for suppliers by conveying it as your guidelines and policies to your employees, stakeholders, vendors, and suppliers. The question is how to convey it. Various methods are suitable, such as seminars, workshops, ebooks, manuals, and guides.

Monitoring of Code of Conduct for Suppliers

You have drafted a code of conduct, implemented it, and informed your employer and suppliers about it. The next step is monitoring to ensure everybody follows the code of conduct. Various procedures and methodologies are used for monitoring purposes, such as self-assessment, surveys, interviews, setting ratings, and comparing suppliers’ and vendors’ performances.

Address the Issues

If any of your suppliers are not following the code of conduct during the monitoring process, warn them and try to resolve the matter after communicating. If the settlement is not made through communications and meetings and suppliers revise the same behavior, then break the contract by sending a notice informing the supplier of the breaching policy.

Benefits of Code of Conduct

code of conduct maintains a healthy relationship with your suppliers and sets your positive image in the industry. Let’s explain the benefits in detail.

Set Fair Expectations

A code of conduct sets transparent and fair expectations from the suppliers and prevents future disputes. In this way, the vendor tries to follow your rules and regulations, which ultimately helps to develop a strong relationship with the suppliers.

Make Your Positive Impact

Every organization must follow ethical, behavioral, and sustainable practices. Mentioning these policies in your code of conduct will increase your positive impact and tell your competitors and customers that you care about the environmental sustainability, human rights, labor rights, and freedom of your workers.

Prevent Future Disputes

When you set expectations and mention them in your code of conduct, you ensure that the supplier strictly follows the rules and regulations and prevents any inconvenience or dispute in the future.

Supplier Code of Conduct Examples And Templates

If you still need help developing your code of conduct, we have included a few templates from famous organizations below for your reference. Please have a look at them and get the best ideas.

• Microsoft supplier code of conduct example
• Google supplier code of conduct
• Hershey supplier code of conduct
• GM code of conduct for suppliers
• Google supplier code of conduct
• McKinsey vendor code of conduct

Microsoft Code of Conduct Example

You can check the full template of Microsoft code of Conduct at the following link

Google Code of Conduct Sample

Check the full Google Code of Conduct on the below-given link

Conclusion

A code of conduct for suppliers is essential to establish a fair, transparent and long-lasting relationship with your suppliers. It helps you to set expectations and adhere to the supplier to follow your regulatory codes and standards. Also, the code of conduct sets you as an example in the industry, attracts like-minded customers, and prevents you from experiencing any inconvenience in the future. The perfect way to put an outstanding code of conduct is to involve your higher management and stakeholders, ask them about the suggestions, analyze the benchmarks that you are missing with your previous suppliers, make a list of them, access your organization’s rules and regulations and then draft a code of conduct. Before passing it on to the suppliers, please review and distribute it to them afterward. You can also check the code of conduct samples from various famous organizations.

Frequently Asked Questions

Why is the Code of Conduct necessary for the suppliers?

A code of conduct for suppliers sets expectations, tells them about your organization’s rules and regulations, and requires them to follow all standard regulatory codes.

How do we resolve the breach of the code of conduct from suppliers?

In case of any breach, you can settle the matter by communicating with the supplier and warning him that he is breaking regulatory compliance. If he still does not listen to you, it is advisable to terminate the contract with him.

How to implement the code of conduct for suppliers?

Convey your code of conduct guidelines and policies to your employees, stakeholders, vendors, and suppliers. The question is how to convey it. Various methods are suitable, such as seminars, workshops, ebooks, manuals, and guides.

How do we monitor the implementation of the code of conduct for suppliers?

Monitoring ensures that everybody follows the code of conduct. Various procedures and methodologies are used to monitor, such as self-assessment, surveys, interviews, setting ratings, and comparing the different suppliers’ and vendors’ performances.

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