Exploring the current landscape and ability to create an ethical/sustainable supply chain
Lessons learned from the pandemic and adaption of business models to diversify supply chain concentration
June 8, 2022
Automation in model risk management
June 8, 2022The views and opinions expressed in this article are those of the thought leader and not those of CeFPro.
By Rachel Michelin, President, CEO, California Retailers Association
What are some of the impacts Covid-19 has had on supply chains?
COVID-19 highlighted the issue that many companies are hugely reliant on China and Southeast Asia markets and other low-cost jurisdictions. Recently global issues have forced companies to rethink their supply chains especially during the COVID-19 pandemic. Customers being forced to stay home, government shutdowns and many of the other issues during a global pandemic has forced companies to rethink the stability of their supply chains as they navigate how to come out of the COVID-19 19 pandemic. Other external influences and government actions continue to impact supply chains such as environmental sustainability, human rights, trade wars and others that while might have been put on the back burner considering the global COVID-19 19 pandemic, will become more important as the global supply chain recovers.
In the last 5 years how has input from regulatory bodies or governments helped create a sustainable supply chain?
The past few years have shined a light on regulatory initiatives adopted and it is now common practice for companies to incorporate regulatory requirements in their approach to managing ethical, social, and environmental risks in the supply chain or face stiff penalties and fines, not to mention backlash from consumers. This raises the stakes for companies that operate global supply chains and have necessitated new, strategic approaches to managing these risks by integrating them as part of their supply chain strategy.
One example of the impact regulatory bodies have is the California Transparency in Supply Chains Act which requires companies doing business in the state, the fifth largest economy in the world, to disclose their policies, processes, and controls to eradicate slavery and human trafficking. An important requirement includes companies providing consumers direct access to their disclosure from the homepage of their corporate websites. Other California policy examples include the California Privacy Rights Act, which was just approved in November 2020, that gives California residents the most sweeping privacy protections in the United States and impacts any company doing business in the state. These regulations and initiatives focus on two very important issues: disclosure and due diligence, both of which require increased knowledge about the supply chain and the origin of products and services.
What consequences could an organisation face in not keeping up with ethical and sustainable supply chain demands?
Consumer awareness of the source of their product is growing and even some state legislatures are taking notice. Not keeping up with this will put companies at a disadvantage in many areas, leaving them flatfooted when a state government requires supply chain transparency or enhanced liability requirements. Companies will also start to be at a competitive disadvantage as consumers move towards companies that showcase ethical and sustainable supply chains.
How does pressure from the public and social media influence supply chains sustainability?
Studies show seventy percent of businesses utilize social media – that is 1.5 billion on a global basis. Companies are using social media to grow their business, expand their base and bring value to their company and their customers.
There are many benefits to the supply chain industry in utilizing social media. Enhanced communication with customers, generate demand for products, reducing costs, mitigating risk, increasing productivity, and enhance marketplace intelligence are just a few of the benefits a robust social media presence can bring to a company in relation to supply chain. If companies are not participating in social media, they could be at a disadvantage because their customers, suppliers, and competitors and supply chain stakeholders are demanding companies to use it as well.
How do you see global trends within supply chain changing, over the next 3 years?
Lessons learned from the COVID-19 pandemic will impact supply chain and global trends for years to come. Customers are demanding not just quality products but the services and warranties behind it. Those companies that can combine pre- and post- sale supply chain activities will come up ahead of their competitors.
Transparency is the key and companies will need to fully report impacts of their manufacturing and business on other segment of society and how their businesses priorities benefit the global society. Examples include reducing carbon footprint, recycling, decrease in packaging, job creation, modes of transportation and disclose the end-to-end impacts of the supply chain. We have already seen this happen in food labeling, but now and in the future consumers will demand this type of transparency from all aspects of the supply chain.
Other trends include global workforce development, more professionalism and certification of supply chain management, micro-targeting, or segmenting, expanded use of social media, and artificial intelligence which will be more integrated in all mainstream supply chain activities.
Rachel presented at Global TPRM: Cross Industry, which took place virtually on December 8-9. Click here to view the full event agenda, as well as insights from the event.
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