Today’s supply chain risk environment is more complex than ever. The global economy relies on the smooth operation of intricate and dynamic supply chains to provide consumers with materials and goods quickly and efficiently, but each year brings new challenges for companies with unexpected threats and consequences.
To help you understand the nature and impact of supply chain risk, we’re diving into two topical issues facing organizations’ supply chain’s today: anti-slavery and natural disasters. We’ll discuss areas of concern and provide insight into how creating a resilient supply chain can be a company’s biggest strength:
Building an Ethical Supply Chain: Combatting Modern Slavery
In 2016, an estimated 40 million people were victims of forced labor around the world, according to the International Labour Organization’s (ILO) most recent research. Unfortunately, some of these people are working in the supply chains of large multinational organizations. The ILO estimates that roughly $150 billion of illegal U.S. profits are generated each year through the exploitation of enslaved people worldwide.
Because of this, the White House has committed to increased policing of anti-slavery measures already on the books. Also, revisions to the Federal Acquisition Regulation (FAR) have been made to address human-trafficking in supply chains. Additionally, the UK saw the passage of the Modern Slavery Bill, which creates new obligations on companies to report the steps they are taking to tackle human trafficking and slavery in their supply chains. Importantly, these disclosures are to be signed by a company director, creating clear accountability.
These increased focus on anti-slavery efforts requires organizations to:
- Assess whether any supplier in their supply chain is impacted by forced labor through regular and on-site assessment of suppliers
- Demonstrate that suppliers are upholding ethical and regulatory standards for anti-slavery by centralizing records for compliance
Building a Resilient Supply Chain: Addressing Natural Disasters
Natural disasters can be devastating to businesses, especially when critical supply chain functions are heavily impacted. Hurricanes, earthquakes, health crises, wildfires and other events can create many challenges, such as shortages of essentials goods (food, medications, etc.) and offerings (electricity, plumbing, etc.).
Companies must evaluate how to proactively prepare their supply chain for disruption. Organizations do so in the following ways:
- Create a disaster preparedness plan: Have a plan ready that outlines what to do in case of an emergency or natural disaster. This plan should take into consideration all types of weather and natural disasters your area (and your supply chain) is most susceptible to.
- Put plans to the test: Run simulations across your supply chain to identify pressure points where natural disasters would have the biggest impact on your operations.
- Monitor for risk: Supply chain risk management works best when companies have the earliest possible notice of potential disruptive impacts. Keep a pulse on risks as they arise through news feeds and other data sources.
- Be transparent and flexible: Be open with members of your team and companies you partner with to adjust your supply chain to reduce risks.
With a constantly changing and growing list of suppliers, supply chain risk management has never been a higher priority. At Vendorpedia, we work with more than 5,000 customers to streamline supply chain risk management, helping organizations prepare for the unexpected while operating efficiently.