A4 Supply chain and community issues
As businesses outsource parts of the production of their products a supply chain forms. This is the sum of the processes involved in producing a product including manufacture and transport. A supply chain often consists of multiple businesses performing roles at different stages.
Unethical practices have been uncovered in supply chains such as poor working conditions, child labour and poverty wages. Expectations are that organisations are responsible for ethical practices not just in their own organisation but throughout the supply chain they use.
Modern Slavery
The UK Modern Slavery Act 2015 places responsibility on businesses to eliminate slavery in their supply chain. The law requires businesses to eliminate poor working conditions in their own operations and ensure all employees receive a living wage. It also requires businesses to perform audits on their suppliers regarding their treatment of staff and use of materials. The act also requires that businesses offer training to their staff on the issue of modern day slavery and how to eliminate it in their supply chain.
Restrictive Trading Practices
Restrictive trading practices are activities of businesses that reduce competition in a market. When there is less competition in a market, it can have a negative impact on consumers. This may include less choice, lower quality products and higher prices. This is because in less competitive markets, businesses have less incentive to invest in improvements to appeal to consumers.
Examples of restrictive trading practices may include larger firms that benefit from economies of scale setting prices so low that it pushes smaller firms out of the market and collusion between firms which allow them to act as monopolies. The Restrictive Trading Practices Act 1956 sets out to increase competition.
