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Introduction & Methodology

Objectives

This research was conducted by Peerless Research Group in conjunction with Supply Chain Management Review magazine and APICS, the leading professional association for supply chain and operations management.

The research was executed to better understand organizations’ current state and future intentions for ethical supply chains.

Methodology

Sample: Members of APICS and subscribers to Supply Chain Management ReviewMethod: All sample members were sent an e-mail asking for their participation in this study

The e-mail invitation included a URL linked to the questionnaire.

Incentive: Opportunity to enter a raffle for a $200 amazon.com e-card

Field and Response

Field: August/September, 2018

Response: Results are based on 710 respondents

Margin of error: At the 95% confidence level, results are projectable at a margin of error of +/- 3.7%

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Industry

63%

7%

5%

4%

4%

3%

2%

12%

Manufacturing

Consulting

Wholesaler

Retailer

Transportation/Warehousing services

3PL

E-tailer/E-commerce

Other

20%

10%

9%

8%

7%

7%

5%

4%

3%

2%

1%

1%

23%

Chemicals/Pharmaceuticals

Food, Beverage & Tobacco

Automotive & Transportation Equipment

Industrial Machinery

Aerospace

Computers & Electronics

Electrical Equipment

Fabricated Metals

Plastics & Rubber

Textiles/Apparel

Furniture

Paper/Printing

Other

Which best describes the nature of your organization’s business?

In which industry do you manufacture goods?

Incl: Medical Devices, Construction/Building Materials, Energy, Agriculture

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How important to your organization are supply chain “ethics?”

Extremely important 53%

Very important 30%

Somewhat important 12%

Not very important 4%

Not at all important 1%

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How would you best describe your organization as an adopter of strategies related to ethical supply chain practices?

13%

29%

33%

18%

7%

Innovator (among the first toadopt/risk-takers)

Early adopter (among the next toadopt/on the leading edge)

Early majority (Cautious andpractical about adopting)

Late majority (Take a wait-and-see approach - Embrace after

the majority have adopted.Typically wait for 2nd generation

solutions)

Laggard (Slow & among the lastto adopt)

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Do you . . .

62%

94%

38%

6%

. . . monitor/evaluate your supply chain(s) for ethical practices? . . . feel your organization should practice or have a plan tooperate an ethical supply chain?

No

Yes

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About how often do discussions involving business or supply chain ethics occur within your company?

24%26%

11%11% 10% 12%

6%

Monthly or morefrequently

Every few months About every 6months

About every 6 – 12 months

Annually Less often thanannually

Never

Average frequency: 5.9 months

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How important are each of the following to your organization at the present time?And, how important will each be to your organization in two years?

74% 77%68% 74%

60%71%

58%65%

20% 19%27%

22%

32%25%

33%28%

6% 4% 5% 4% 8% 4% 9% 7%

Now In 2 years Now In 2 years Now In 2 years Now In 2 years

Not very/Not at allimportant

Somewhatimportant

Highly important

Environmental sustainability

Safeguarding against corruption

Responsible labor practices

Defending human rights

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Which of the following practices/principles is your organization now following?

69%

63%

57%

56%

55%

54%

53%

48%

47%

45%

42%

38%

31%

2%

6%

Eliminating discrimination in the workplace

Making efforts to uphold environmental responsibility

Labor conditions

Fighting corruption (extortion, bribery, etc.)

Developing and employing environmentally friendly technologies

Ethical sourcing

Taking steps to understand environmental challenges

Assuring we’re not complicit in human rights abuses

Supporting and protecting human rights

Eliminating child labor

Eliminating forced labor

Avoiding the use of conflict minerals

Upholding and recognizing the right to collective bargaining

Other

None

Multiple responses accepted

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Which of the following practices/principles does your organization have future plans to follow/abide by?

58%

54%

54%

54%

53%

50%

49%

46%

46%

36%

36%

35%

31%

3%

14%

Making efforts to uphold environmental responsibility

Ethical sourcing

Taking steps to understand environmental challenges

Eliminating discrimination in the workplace

Developing and employing environmentally friendly technologies

Fighting corruption (extortion, bribery, etc.)

Labor conditions

Supporting and protecting human rights

Assuring we’re not complicit in human rights abuses

Eliminating forced labor

Avoiding the use of conflict minerals

Eliminating child labor

Upholding and recognizing the right to collective bargaining

Other

None/No Plans

Multiple responses accepted

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Over the last two years, how much progress has your company made in creating an ethical supply chain?

31%33%

17%19%

We have further advanced ourethical supply chain initiative

We are implementing our plan We are in the planning phase, buthave not yet implemented

None at all

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Which area is most responsible for ethical supply chain compliancy?

31%

23%20%

11%9%

3% 3%

Supply Chain Corporate Procurement Operations Legal Finance Other

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What is the job title or job function of the person most responsible for ethical supply chain compliancy at your organization?

21%

12%

9%

7%

7%

4%

3%

2%

2%

2%

2%

2%

27%

Vice President, Head, Director of Supply Chain/GSC

Head, Director, Manager of Procurement/Purchasing/Sourcing

CEO, President

Chief Compliance Officer

COO, Head, Director of Operations

Director, Manager (unspecified)

Corporate Legal

Vice President (unspecified)

Corporate HR

Quality Control

Controller, Head of Fiinance

Director of EHS (Environment, Health, Safety)

Other

The following each received 1%:Owner, PartnerManager, Plant/FacilitiesDirector of Production/ManufacturingDirector, Manager LogisticsDirector, SustainabilityMaterials ManagerGeneral ManagerDirector, Manager of Ethics Director of Social ResponsibilityProgram Manager

Other/Miscellaneous (11%)

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Where are your subcontractors located?

62%

55%

32%

24%

17%

11%

8%

6%

6%

6%

United States

Asia

Europe

Mexico

Canada

South America

Middle East

Central America

Africa

Other

Multiple responses accepted

Do you outsource or subcontract your manufacturing and/or kitting/assembly tasks?

Yes 47%No

53%

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Does your organization have a formal policy to understand where products are manufactured, who manufactures, or who handles any kitting processes

of your goods?

Yes, have a formal policy

70%

No 25%

Other 5%

Does your organization have an initiative to better understand how your suppliers operate?

Yes, have an initiative to understand

how suppliers operate

43%

No 57%

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Do you formally audit your suppliers for their practices?

Yes, we formally audit our suppliers

59%

No 33%

Other 8%

85%

36%

5%

Internal auditors Independent, third-party auditors

Other

Who conducts these audits?

Multiple responses accepted

68%

68%

32%

Labor rights and workingconditions

Environmental impact issues

Other

What are you auditing?

Multiple responses accepted

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Does your company have a code of conduct for suppliers?

Yes, and we enforce

it/check for compliance

51%

Yes, but it’s not enforced

20%

No 29%

What is included in this set of code guidelines?

77%

75%

73%

66%

58%

48%

47%

43%

39%

35%

Meets certification codes and localregulations

Environment, health and safety policies andpractices

Ethics (avoid corruption)

Sustainable business practices (minimizeuse of hazardous materials)

Fair labor practices

Supplier diversity is encouraged

Support human rights

Avoid using conflict minerals in products

Worker insurance/HR best practices

Respect employees’ rights to join trade unions, associations, etc.

Multiple responses accepted

Among companies following a code of conduct . . .37% have lost suppliers

as a result of enforcing compliance

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Does your company assist in improving working conditions?

Yes 59%

No 41%

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Do you use software, tools or technologies to monitor supplier compliance?

Yes 47%No

53%

SAP 19%

Excel 12%

Home grown/Internal software 12%

Supplier Management tools, scorecards 5%

ERP 3%

Sage 3%

Achilles 2%

The Zone 2%

Other, Miscellaneous 64%

Unknown/Don’t know 8%

What software, tools or technologies are you using to monitor supplier compliance?

Multiple responses accepted

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Is your organization a member of any organization that helps encourage ethical

supply chains?

Yes 19%

No 81%

Which organization(s)?

38%

25%

12%

6%

4%

3%

28%

UN Global Compact

International Labor Rights Forum

World Wildlife Fund

China Labor Watch

Fair Wear Foundation

QuEST Forum

Other

Multiple responses accepted

Note: No organization received more than 2 mentions. Many mentions were vertical industry-specific

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Respondent Demographics

62%

3%

6%

1%

2%

8%

11%

3%

2%

2%

United States

Mexico

Canada

Central America

South America

Europe

Asia

Africa

Middle East

Other

Incl: South Africa Nigeria

Incl: Costa Rica

Incl: France Germany Italy United kingdom Switzerland Denmark Ireland Hungary

Incl: United Arab Emirates Lebanon Saudi Arabia

Incl: Australia

Incl: Brazil Colombia

Less than $100 million

32%

$100 million –$499.9 million 21%

$500 million - $999.9 million 10%

$1 billion -$2.49 billion

11%

$2.5 billion -$4.9 billion

6%

$5 billion or more 20%

Respondent location 2018 company revenues

Average Median

2018 revenues $1.544B $454M

Incl: India, China, Japan, Pakistan, Malaysia, S. Korea, Singapore, Taiwan

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