Data is the key to uncovering risk in the supply chain – Alcumus – Supply Chain Digital | Region & Cash

The world is experiencing turbulent times. The effects of the COVID-19 pandemic, climate change and the conflict in Ukraine have weighed heavily on the global economy. Global supply chains are feeling the tension and are predicted to remain difficult for the remainder of 2022 and beyond.

While these challenges cause great difficulties in the short term, they can also be seen as a catalyst for change. Adversity presents an opportunity to step back and reconsider how organizations can best protect themselves from similar challenges that will inevitably arise in the future.

Now there is a unique opportunity for organizations to embrace real change, integrate more rigorous processes and build greater resilience to ensure future storms can be weathered more effectively. This not only benefits the global economy, but also society as a whole.

Why supply chain resilience is so important

The past few years have highlighted the existing weaknesses of the global economy. Supply chain weaknesses, inflexible approaches, disenfranchised populations to name a few. Not seizing the moment and considering alternatives could be fatal for companies. Dangers include:

  • Increased operational risks and liabilities
  • rising costs
  • resource scarcity
  • financial difficulties
  • Damage to brand and reputation
  • Set a new course

Companies must be flexible and react quickly to disruptions. They also need to take a long-term view, looking to the future and considering how best to protect themselves, their environment and the societies in which they operate.

To be more resilient, focus on change,

This is the first in a series of blog posts exploring what drives the need for organizations to be more resilient, flexible, and agile. The following topics are covered:

• Disruption of supply chains

• Risk management for third parties

• Creation of a safety culture

• Disclosure of risks through full data transparency

disruption of supply chains

Even before the pandemic, concerns about the vulnerability of supply chains were growing. The disruption of the last two years has clearly brought this into focus.

While a global economy has many benefits, including greater choice and value, these do not come without costs. With so many companies relying on products and materials to be transported from around the world, there are a multitude of risks associated with supply chains, some of which can be controlled and others cannot.

Recent events have brought supply chains to near collapse, putting companies under tremendous pressure to quickly find alternatives to maintain performance.

Issues related to transportation, labor shortages, natural disasters and conflict have all highlighted the importance for companies to build resilience into their supply chains and examine how best to mitigate risk.

Research shows that the more proactive companies can be in this area, the better. Our comprehensive 2021 study of 450 medium and large UK companies¹ found:

• More than three quarters of companies are adversely affected by supply chain issues

• 40% of companies have found that verifying their supply chain credentials has become more difficult over the past two years.

In the past, Risk management in the supply chain has focused on logistical delays or the financial security of suppliers. It is now clear that the scope needs to be broadened to include larger, global issues such as climate change, societal changes and geopolitical disruption.

Third Party Risk Management

A typical organization works with a large number of suppliers and contractors that require close and careful management. The actions of these partners matter, and they must operate to rigorous standards to mitigate risk and avoid reputational damage. Organizations need to improve pre-qualification and verification processes throughout the supply chain, which is neither easy nor straightforward.

Factors such as health and safety, ethical standards, cyber security and financial management all need third party oversight to build resilience and sustainability. Problems in these areas can have a serious impact on sales and reputation.

The Alcumus benchmarking contractor management Survey from 2020² found:

• Every single respondent felt that health and safety compliance assessments were important for suppliers.

• 88% also considered ethical and sustainable compliance to be important. This rose to 92% during the first lockdown.

Businesses must be able to demonstrate that the suppliers and contractors they work with meet the required regulatory standards and adhere to the same safety, sustainability and ethical values. If this cannot be proven, companies are potentially at enormous risk. Working with those who don’t meet the required standards can be extremely costly.

The factors to consider are:

• Do you have a complete view of everyone in the supply chain?

• Do they meet the relevant regulatory and legal requirements or do they meet best practices?

• Is the health and safety of contractors and suppliers regularly reviewed?

• Have you taken steps to regularly review the operational, financial and ethical practices of these third parties?

Effective Third Party Risk Management must include a much clearer overview of contractors and suppliers. By ensuring they operate to the highest standards of safety and ethics, much greater resilience can be built into their relationships.

Creating a safety culture

Health and safety at work has risen on the agenda for both employers and employees over the past two years. Getting this wrong can have serious consequences. Providing a safe workplace goes far beyond a legal obligation. It’s about treating employees with respect and valuing their well-being.

The Health and Safety Executive (HSE) published its annual UK health and safety statistics in December 2021. The 2020/2021 figures for Great Britain show:

• 1.7 million workers were affected by diseases

• 441,000 workers were injured and there were 142 deaths

In the US, the numbers are collected by the US Bureau of Labor Statistics³. highlight these

• More people were killed at work in 2019 than in any year since 2007

• Every 99 minutes, a work-related incident causes one fatality

What should a more robust health and safety management contain?

• Management is committed to making this happen

• Companies that walk the talk, not just words

• Employees were listened to and valued

• Employees feel empowered to enforce standards and point out deficiencies

• Regular investment in required policies, processes and equipment

Not only is good health and safety morally right, research shows that workers are more productive in workplaces that are committed to health and safety4. It will also help reduce absenteeism, reduce downtime from illness and accidents, and limit disruption.

Disclosure of risks through full data transparency

In the modern workplace, there is no substitute for trusted, accurate data. Without them, it is impossible to deal with rapid change and keep up with the competition.

Technology has the power to accelerate the transition to greater resilience. Access to all the data you need makes it easy to review, analyze, and make accurate, timely decisions.

Technology also has the power to make connections, bring teams together and support better collaboration.

Superior data visibility gives organizations and executives a complete view, enabling them to accurately assess risk and take decisive, positive action to drive change.

Full data transparency has key business benefits such as: e.g.:

•Ensuring compliance with required regulations and obligations

• Better, more accurate decision making

• Ability to demonstrate due diligence

• Supporting a culture focused on sustainability

• Reduction of costs

• Support for better quality

• Strengthen employer branding to win over customers and attract new talent

• Supporting better employee health, safety and well-being

• Emphasis on continuous monitoring and improvement

• Less administrative effort

Now is the time for businesses to pause and restart and focus on improving their digital capabilities to improve both the effectiveness and efficiency of their operations. This should not only improve your own business Supply chain visibilitycreating greater resilience and ensuring agile and rapid response to future disruptions.

These are the issues that are not only relevant now, but will help shape the future of how and where people work and how businesses operate around the world. They will not be solved if treated in isolation. A holistic approach using the latest technology is crucial for a better, fair business model.

Download Alcumus’ latest eBook: Building Resilience in a New Global Economy to strengthen your contractor network and safety culture.

About Alcumus

alcumus is a global leader in technology-enabled risk management solutions that provide advice, expertise and support to help clients identify and mitigate risk, manage compliance and protect people. It supports clients with a wide range of risk management solutions including supply chain compliance, EHS software, certification and asset inspection.

SWELL

1. Alcumus Supply Chain Compliance and Resilience Research, December 2021 from 450 medium and large UK companies

2. Study commissioned by Safety and Health Practitioner of Environment, Health and Safety (EHS) managers in UK companies, March and May 2020

3. Bureau of Labor Statistics US Department of Labor, press release, Dec. 2020

4. The Impact of Health and Safety Management, iosh and Loughborogh University, 2021

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