Ride the Storm: Navigating Through Unstable Periods / Katerina Rudko (Belka G...
SAIGLOBAL_Supplier_Compliance_Management_Final
1. As organisations grow and evolve, supply chains become more
complex webs of direct and indirect suppliers. This creates an ever
increasing risk on an organisation’s ability to satisfy its customers
in terms of quality, safety, integrity, and continuity. Not to mention,
meeting customer demand for a higher level of ethical standards
both in manufacture and sourcing. Whilst supplier contracts are in
place to assist in managing liability, the responsibility for supplier
risk can shift, but not the accountability.
Ensuring effective supplier compliance management is more crucial than
ever as your brand is often in the hands of your suppliers. This can be
achieved through an active monitoring process to manage your supplier’s
compliance to your requirements and best practice – in line with specific
criteria laid down by you. With international standards moving to a
less prescriptive stance, such as the latest release of ISO9001:2015 ,
organisations have opted for developing their own vendor assurance
programs to supplement these internationally recognised standards
with criteria which are more aligned to their particular products and
specification. This practice, most commonly found in the food retail sector,
ensures explicitly defined business risks are being managed.
This paper explores the current challenges of supply chain management
largely based on two global research initiatives undertaken by SAI
Global last year. Participants in the research were employed across
private industry and government organisations, operating either
domestically or in a number of international markets.
A common theme from the research was that organisations considered
that the greatest challenge in supply chain management is knowing all
the supply chain risks and where they arise, and then determine the
most appropriate priorities and control methods. As to be expected,
product safety and quality of their supply chain were of greatest concern,
although sustainability practices and ethical workplaces were also clearly
identified as areas of importance. It’s envisaged however, that whilst the
innovation challenge was not at the top of the list, this area should grow
as organisations seek to extract value out of the supply chain and move
towards more collaborative and transparent supplier relationships.
MANAGING DOWNSTREAM SUPPLY RISK
Most organisations generally manage their suppliers through
contractual arrangements, placing the onus on suppliers to manage their
own supply chain. However, there was some consideration that more
formal monitoring of subcontractors or second and third tier suppliers
may be required. Whilst key performance indicators (KPIs) for suppliers
are common practice, the challenge for most organisations is ensuring
these KPIs are applied throughout the supply chain and ensuring they
are the right metrics for the early identification of risk. Globalisation
and consistent pressure to improve stakeholder or shareholder returns,
has resulted in the common practice of using off-shore suppliers for the
manufacture of components or non-core products. Organisations need
to perform a fine balancing act of ensuring effective monitoring is in
place whilst maintaining cost efficiencies and standards.
EXTRACTING VALUE OUT OF THE SUPPLY CHAIN
For the more mature supply chains, cost is no longer the only evaluation
criterion. Organisations are seeking more collaborative innovation projects
that will benefit both trading partners. Industry has turned to technology
to assist in the process, resulting in the increased adoption of collaborative
IT platforms. Collaboration often occurs with the sharing of medium to
long term strategic plans to ensure both partners are capable of meeting
immediate and long term needs. Determining appropriate metrics, beyond
the level of research and development spend, should largely be driven by
desired organisational outcomes and there is an increasing trend of these
KPIs becoming a part of selection and onboarding process.
GROWING PAINS
OF SUPPLY CHAIN
MANAGEMENT
AT SAI GLOBAL PROPERTY DIVISION, WE ALWAYS STRIVE TO PUT OUR
CUSTOMERS FIRST BY DELIVERING QUALITY SERVICE AND A RE-
WARDING EXPERIENCE.
DESPITE THE LEVEL OF
COMPLEXITY ORGANISATIONS
FACE WHEN MANAGING THEIR
SUPPLIERS, 27% ARE STILL USING
SPREADSHEETS
27%
51%
HAVE ADHOC PROCESSES IN
PLACE MAKING THEIR RISK
MANAGEMENT QUITE IMMATURE
DETERMINING
APPROPRIATE CONTROLS
AND PRIORITIES
53%
KNOWING ALL OF OUR SUPPLY
CHAIN RISKS AND WHERE
THEY ARISE
60%
ABILITY TO EVALUATE
CONSOLIDATED IMPACT OF
RISKS
38%
Global Trends in Supply Chain Risks
www.saiglobal.com
THE TOP 3 CHALLENGES ORGANISATIONS FACE WHEN
CONSIDERING RISKS FROM THEIR SUPPLIERS OR PARTNERS WAS:
AS ORGANISATIONS SEEK TO EXTRACT MORE VALUE OUT OF THE SUPPLY
CHAIN, PRODUCT QUALITY AND SAFETY ARE STILL THE MOST IMPORTANT
ASPECT OF SUPPLIER COMPLIANCE. INCREASINGLY ETHICAL WORKPLACES,
SUSTAINABLE PRACTICES AND INNOVATION ARE BEING ASKED OF SUPPLIERS
76%
ACKNOWLEDGED A LEVEL OF
QUANTITY AND COMPLEXITY
OF RISK REGARDLESS OF SIZE
OF SUPPLY CHAIN
0 1 2 3 4 5
CONTRIBUTING AUTHORS
PAUL OH, PRODUCT MANAGER, SAIGOL
AND DAVID GRAY, LEAD FACILITATOR ISO9001
1 InternationalStandardsOrganisation(2015)ISO9001:2015–JustPublished!
