Archive: November, 2015

Transparency in Supply Chains

The Transparency in Supply Chains clause from the Modern Day Slavery Act came into force last month. In brief, organisations with a turnover of £36 million or more are required to produce and publish a slavery and human trafficking statement each financial year. The Act has been well publicised and much has been written about it by people whose expertise far exceeds mine. If you want to find out more then I recommend the CIPS’s Modern Day Slavery 2015.

I’m sure that we all agree with the home secretary, Theresa May, when she said that “The presence of modern slavery in today’s society is an affront to the dignity and humanity of every one of us”. Unfortunately identifying issues such as modern day slavery in long, complex supply chains is difficult. And there are a raft of other issues to consider including the environment, health & safety, discrimination, corruption, conflict minerals, confidential information and supplier diversity.

The challenge for CPOs is to decide what to focus on and which resources to dedicate to it. Whilst some organisations like Unilever make corporate responsibility central to their strategy and define the scope clearly in their Sustainable Living Plan, wide variation in approaches still exists between sectors and organisations. A summary can be found in my article called More on sustainability.

The starting point for tackling any of these issues is having an excellent knowledge of the supply base. Despite the advent of big data and spend analytic tools, many procurement organisations still manage their data on spreadsheets. Although most procurement organisations conduct due diligence on new suppliers, the majority do it manually with a narrow focus on financial performance which is seldom repeated during the term of the contract. Finally, although procurement professionals are encouraged to visit their suppliers, their workload is often heavy and travel budgets are tight. Admitted there are a number of providers of supply chain audits, however, most organisations are unwilling to invest in them.

I fully support the Transparency in Supply Chains clause. The legislation represents is a positive step but its effectiveness will depend not on the statute book but on organisations choosing to prioritise modern day slavery over other initiatives and making the resources available to carry out robust due diligence.