Why supply chain compliance matters to consumers

  • Written by Peter Needle
  • Published on 31 August 2015
  • Blogs

The Modern Slavery Act will soon transform the significance of supply chain compliance for thousands of UK organisations.

The Modern Slavery Act will soon transform the significance of supply chain compliance for thousands of UK organisations. Relationships with suppliers and subcontractors will come under increased scrutiny as companies work to distance themselves from conditions of modern day slavery.

New legislation will only apply to companies that exceed a turnover threshold of £36m when it comes into force in October. However, smaller companies may still need to act as a result of increased pressure from stakeholders and market competitors.

Consumers favour ethical products

As the Modern Slavery Bill progresses through the UK Parliament, it’s important that retailers understand the extent of consumer opinions in relation to supply chain compliance.

Walk Free Foundation and Yougov undertook a survey to understand the British consumer’s attitude towards modern slavery in the supply chain. Interestingly, 66% of consumers said they would switch from their favourite products if they found they were made using modern slavery.

The research also found that 53% of consumers would pay more for their favourite products in order to ensure they were free from modern slavery. Of these consumers who were prepared to pay more, over 50% were prepared to pay up to 10% more for this guarantee, and 34% were willing to pay over 10% more.

Companies under pressure to comply

Businesses will be able to comply with the Modern Slavery Act requirements simply by stating that no steps have been taken to protect against modern slavery. However, it may be unwise to ignore the impact of supply chain compliance on brand reputation.

The new legislation will make it absolutely transparent what action a business is or is not taking and will allow investors, consumers and the general public to decide who they should and should not do business with.

We believe that the measure will encourage businesses to do the right thing by effectively harnessing consumer and wider stakeholder pressure. Big businesses with the resources to pursue the act fully may also demand changes from their wider supply chain, influencing smaller businesses in turn.

This domino effect could see new compliance standards being addressed across the UK, regardless of company turnover. However, will smaller businesses have the visibility to properly check for this kind of supply chain risk?

What ‘Transparency in Supply Chains’ entails

Guidance has been published to help companies compile their annual statement, but it has been stressed that statements will vary according to individual supply chains. As the summary of Government consultation responses explains: “It’s important to gain the benefits of transparency while avoiding placing undue burdens on business, and ultimately, businesses will benefit most from developing policies and practices relevant to their own circumstances.”

However, five main points of focus have been identified. These include a description of an organisation's supply chain model, current risks related to modern slavery, and any policies and staff training in place to address these risks. Companies should also note key performance indicators which can be used to assess the effectiveness of their actions.

This won’t be an easy job, and many companies will need a supply chain compliance system to support these activities.

How we can help

Our supply chain compliance software makes it possible for companies to gain visibility over their supplier base. Segura acts as a living blueprint of a company’s supply chain model, managing and monitoring orders placed online with audited suppliers and subcontractors.

Real-time data feeds can highlight any supply chain risks as they emerge, allowing companies to address any ethical, financial or quality issues before a problem develops. Comprehensive audit trails are also produced to trace every individual order through the upstream supply chain, enabling companies to analyse key performance indicators such as cost and speed of delivery. This wealth of data can support ongoing improvements to the supplier base, and ensure that compliance measures are constantly improving.

x

CHECK OUT ANOTHER BLOG

Like what you see? We've got plenty more where that came from.

GO THERE

WANT TO FIND OUT HOW WE CAN HELP YOU?

VISIT OUR MODULES PAGE

VISIT NOW 1.0.0.20