Are You Ready To Do The Right Thing? The Part You Could Play In Supply Chain Due Diligence

1. Are you ready to do the right thing?
Playing your part in supplier due diligence
CPO event 22.11.2016
Ted Datta
Director - GRC Solutions (UK & Ireland)
Bureau van Dijk

2. Overview
The key issues surrounding supply chain due diligence
Case studies: two contrasting approaches
Takeaways: the latest data & visualisation tools

3. But first, a Question
How should ‘Procurement’ contribute to supplier due diligence?
1. Establish supplier due diligence policy and management framework
2. Establish working groups to create policy and frameworks
3. Feed specific requirements into policy and frameworks
4. Managing suppliers against policy and frameworks

4. What are they key issues
facing supply chain due
diligence?

5. Key Issue (1) – Ethical Procurement
Modern Slavery, Human Trafficking & Forced Labour
.21 million people are victims of forced
labour – 11.4 million women and girls and
9.5 million men and boys
Nearly 50% of 533 corporate respondents
surveyed stated Human Rights was the
number one issue in the coming 12 months
https://www.theguardian.com/global-development/2016/jun/10/court-finds-uk-gangmaster-liable-for-modern-slavery-victims-kent-chicken-catching-eggs

6. Key Issue (2) – Corporate Transparency
Anti-Corruption Beneficial Ownership
https://www.theguardian.com/uk-news/2016/sep/12/prosecution-failure-prevent-fraud-by-staff-white-collar-crime

7. Key Issue (3) – Political & Economic Uncertainty
http://www.bvdinfo.com/en-gb/blog/supplier-and-credit-risk-management/retailers-focusing-on-supply-chains-since-brexit-v

8. Case Studies
Contrasting approaches to due diligence

9. Case Study – 1
“Going it alone…”

10. Retailer – £1.5bn
Low-cost sourcing model(s)
Emerging market supply chain
Industry & Organisation

11. The business challengeBusiness challenge
Renewal of banking agreements due imminently
New covenants imposed by primary banks
Vet all suppliers against Sanctions

12. Sanctions
Trade restrictions on dealing with certain entities & individuals
State owned entities (SOEs) and special designated nationals
(SDNs) focus of regimes
Punitive fines & reputational loss
http://www.wsj.com/articles/schlumberger-unit-expected-to-plead-guilty-to-violating-iran-sudan-sanctions-1427312135

13. Stand-off…
Project leadership

14. Solution (project 1) – Data Quality

15. Solution (step 3) – purposeful testing
Solution (project 2) – Supplier Segmentation

16. Solution (project 3) – Risk Model
Output
ContentCapability

17. 128 “red-flags” identified
Outcome

18. Role of Procurement
Running three separate projects at once!
Left alone to build a risk model for supplier screening
Balance “commercial” and “compliance” supplier relationships

19. Lessons learnt
Build connectivity to the sourcing process
Focus on what happens next – ongoing monitoring
Collaborative “working groups” are not easy to create

20. Case Study – 2
“Better together…”

21. Pharmaceuticals – £16bn GBP
Highly regulated sourcing
Globally integrated supply chain
Industry & Organisation

22. The business challengeBusiness challenge
High profile bribery & corruption scandal(s) within industry
External auditors identified gaps in current process
Global supply chain of >15,000 entities

23. 3rd Party Due Diligence Programmes
! HIGH VOLUMES ! MULTIPLE TIERS
Not just suppliers (all third parties)

24. Lots of Interested Parties
FINANCE TECHNOLOGY
COMPLIANCE, LEGAL & TRADE SANCTIONS
Not just procurement (diverse project group)

25. Live Process: Global Pharma Client
Solution (1) – design the end-to-end process
Due
Diligence

26. Live Process: Global Pharma Client
Solution (2) – streamline the end-to-end process
Due
Diligence

27. Outcome
Streamline due diligence process upfront – fail fast!!
Total coverage of 3rd parties, not only “perceived risk”
Less reliance on manual questionnaires

28. Role of Procurement
Designing the end-to-end business process
Engaging specific subject matter experts for input
Achieve automation where possible

29. Lessons learnt
Upfront due diligence saves time and cost
Industry standards are consistently rising
Senior sponsorship from the outset is critical

30. Takeaways
Latest data & visualisation tools

31. Unravelling the corporate world…

32. …to help you make informed decisions

33. Introducing RepRisk
“
“Environmental, social and corporate governance business intelligence…”

34. Takeaways
Supply chains are about more than just supply
Be ready to answer questions about effective due diligence
The only approach is a joined-up approach

35. And finally, that Question
How should ‘Procurement’ contribute to supplier due diligence?
1. Establish supplier due diligence policy and management framework
2. Establish working groups to create policy and frameworks
3. Feed specific requirements into the policy and frameworks
4. Managing suppliers against the policy and frameworks
5. All of the above