Strong supply chain management can dictate a company's public image and financial success.
Manufacturers face huge pressures from well-informed consumers and anxious retailers to assess the social and environmental impact of their products, and technology is helping to automate these complex processes.
Keeping up with the Internet of Things
The Internet of Things (IoT) refers to the movement of information across wireless networks without any human interaction. Smartphones, laptops and even cars can be capable of this, with Gartner predicting that the IoT will reach 26 billion devices by 2020.
"Supply chain leaders must design their processes to operate in this digital business world," says Michael Burkett, managing vice president at Gartner. "This includes fulfilling the new expectations of customers."
At the Sedex Global Responsible Sourcing Conference last year, Richard Howitt also spoke of the effects of outsourcing on corporate social responsibility (CSR). He stated: “Some 80% of manufacturing around the world is subcontracted… which means that the focus in terms of concern is now much less about the company… much more about the supply chain.”
Remote suppliers and subcontractors are becoming a source of increasing concern, as they can represent a weak link in supply chain management that could pose a risk to the entire production line.
Supply chain planning offers financial rewards
Strong supply chain management can improve a brand's reputation both with consumers and business partners, including financial backers. Mike Lombardo, Senior Sustainability Analyst and Manager at Calvert Investments, explains: “As investors, we expect companies to manage and disclose how they tackle challenges within their direct operations and supply chains.”
A recent report by Deloitte also found that 79% of manufacturing and retail organisations with superior supply chain capabilities achieved above-average revenue growth. In comparison, only 8% of organisations with lower-performing supply chains boasted similar profit levels. Supply chain management helps to analyse and streamline operations, and consequentially turn big profits.
Manufacturers should embrace supply chain technologies
In order to share this kind of complex information with customers, retailers need to be in full control of their supply chain processes. The Modern Day Slavery Briefing was launched at the 2014 Sedex Global Responsible Sourcing Conference, and aimed to show how modern day slavery occurs in today’s production industries. However, it openly admitted, “given that supply chains are complex and multi-tiered, it is likely that this is not the full story.”
Unethical practices such as forced labour can sometimes be missed by typical auditing processes, as workers are afraid to speak openly with auditors and objective evidence can be difficult to compile. What's more, if work is subcontracted to another supplier without consent, visibility beyond first tier suppliers will be hazy at best, making comprehensive auditing impossible.
Segura is an innovative software platform that can help companies to take back control over their supplier base. By placing all orders within a framework of pre-approved suppliers, users can benefit from truly informed supply chain management throughout the manufacturing process.
Editor's note: This updated blog post was initially published in April 2014.
