Supply chains are a vital component to a business’s overall competitiveness and its level of success. However, the global nature of supply chains also makes them increasingly exposed to a range of risks especially with regards to the legal landscape. It’s for this reason that companies are urged to put their focus on their business practices to mitigate the risk of potential oversights.
Supply chain oversights can lead to a number of threats. Aside from the obvious factors such as cash, reputation, and inefficiencies, it can create legal and regulatory non-compliances and even open up the door for fraud too. To prevent any hiccups along the supply chain, it’s vital that companies have a clear view of who all of their suppliers are through multiple tiers (OMX can help with that), stay up to date with the latest legal landscapes and ensure that the correct processes are being followed both internally as well as with external third-party suppliers and services.
At the end of the day, supply chain management is a strategic issue. With a number of internal and external forces threatening to raise the chance for error within a company’s network, Deloitte has even penned a report stating that 71% of executives say that supply chain decisions make up the bulk of their strategic conclusions. So, how do you stay on top of a forever changing legal landscape? In this article, we will equip you with the top supply chain risks and ways for you to prevent any crucial oversights.
Potential Supply Chain Oversights that May Impact Your Operation
While it’s impossible to anticipate internal and external trends that make up the business world’s legal landscape, it’s possible to prepare your company for the known risks.
New laws and regulations are being introduced every day, with the more notable changes being implemented in Australia. A new modern slavery law will require firms to innovate and develop metrics that ultimately alleviate traces of slavery in supply chains. Being introduced in 2018, this is the perfect example of how quickly organizations can be expected to shift their strategies.
Supply Chain Quarterly recently shared a report on 2019’s top 10 supply chain risks. These risks vary from trade relations to global climate impacts - each of which holds extreme value in the overall contribution to a sustainable business. Below is a list of trends that organizations are urged to keep an eye on and assess their own implications throughout their network.
- Trade Wars
- Raw Material Shortages
- Recalls and Safety Scares
- Climate Change
- Tougher Environmental Regulations
- Economic Uncertainty and Structural Change
- Industrial Unrest
- Shipment Fires
- Battles at the Border
- Aviation Safety
Each of these factors may directly or indirectly affect a business’s operation and create the need for critical action to be taken. In addition to this, it’s notable that these risks are mostly made up of macro influences. It’s no wonder that Deloitte cites that 56% of executives fear macro-environmental concerns as their biggest supply chain worry. However, most of these risks can be avoided through effective procurement policies and a holistic network management strategy.
How to Achieve an Oversight-Free Supply Chain
When it comes down to it, oversights can be expensive and even detrimental to a company’s reputation. Not only can they hinder internal and external processes, but it can also bring them to an entire halt. But what is the answer? Supply chain transparency!
Companies are under pressure from governments, consumers, and key stakeholders to divulge more information about their operations. Investing your efforts in a sustainable supply chain can be achieved with the right tools and a dedicated mindset. It will require businesses to go beyond the final dollar, look past the cheapest price points, and to consider the overall impact they’re creating with their operational choices.
Supply chain oversights can be avoided by:
- Knowing your supply chain, including mapping out multiple tiers in a chain (contact us for help)
- Implementing an effective procurement process
- Selecting the right suppliers
- Holding suppliers accountable
- Choosing suppliers that are in-line with company policies and standards
- Conducting periodic audits
- Constantly monitoring risks
- Analyzing the supply and value chain as a whole
- Disclosing regulatory requirements and stakeholder demands
The Bottom Line
While the future of supply chains can change within a second, one aspect of it will remain the same: sustainability is king. By innovating and collaborating with ethical suppliers, being proactive in your resource choices, and aiming for full trading transparency, a company’s supply chain should stay ahead of any sudden legal trends. The Business for Social Responsibility said it best, “Deepening our understanding of both sets of drivers and their potential implications for supply chains creates a powerful lens through which to reimagine the ways that all parties to global supply chains create value and contribute to a more just and sustainable world.”