Tag Archives: environmental

The Emerging Business of Supply Chain Risk Management

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For many organizations, globalization, outsourcing, and extended supply chains are effective strategies to increase efficiency and achieve economies of scale, however, these benefits are accompanied by the significantly increased risk to quality, safety, business continuity, reputation, and more.

Is Your Company Safe to Work With?

As reported by Forbes, there’s an emerging category of business – supply chain risk management – of which many companies aren’t yet aware.

For the largest companies, this is a jugular area – imagine the exposure of a large oil company or a large online retailer when a supplier they’ve contracted with makes a mistake or even causes an all-out disaster? (Think oil drilling contractor, for example.)

Risk Management Overview

For many organizations, globalization, outsourcing, and extended supply chains are effective strategies to increase efficiency and achieve economies of scale.

However, these benefits are accompanied by the significantly increased risk of quality, safety, business continuity, reputation, and more.

Identifying Risk in the Supply Chain

Organizations are always at risk for losses through cost volatility, supply disruption, non-compliance fines, and safety incidents that cause damage to their brand and reputation.

Knowing what’s at stake is the first step to understanding, measuring, and managing risk in your supply chain.

Supply Chain Safety

Among the highest priorities for companies across all industries, safety concerns are often magnified in chemical, oil and gas, construction, and manufacturing.

Workplace accidents can jeopardize contracts, result in fines, and cause significant damage to a company’s reputation.

Supply Chain Quality Control

Do your vendors and suppliers meet your standards for quality and consistency?

Customers are quick to react when they perceive a drop in quality; and, even the smallest product issues can be difficult to recover from.

Supply Chain Financial Challenges

Any disruption to the supply chain due to financial challenges has the potential to impact business continuity and, ultimately, your bottom line.

Taking a proactive approach to understanding supplier financial strength can prevent disruption and unnecessary costs.

Supply Chain Compliance

Are your contractors insured? Do they have the right type of insurance, the right limits?

Knowing this information will help you to manage insurance risk and avoid potentially costly litigation.

Supply Chain Reputation

Damage to a company’s brand or reputation can be long-lasting, extremely costly, and sometimes unrecoverable.

Committing to a supply chain risk management strategy can not only prevent brand damage but can also serve to foster new partnerships with organizations that share like values.

Supply Chain Sustainability

It’s no longer enough to assess risk within the traditional construct of a supply chain.

Organizations must look beyond and consider environmental impacts and corporate social responsibility, including adherence to labor laws and sustainable practices.

Read more at The Emerging Business of Supply Chain Risk Management

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Retailers worth $3.3trn scaling up supply chain sustainability

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Leading retail powerhouses are stepping up on supply chain sustainability, according to the latest figures from CDP, a global environmental impact non-profit.

The world’s largest retailer, Walmart, has just been joined by three more of the top 20 retail companies – CVS Health, Target Corporation and Tesco – in collecting data from suppliers to reduce environmental risk and cut carbon emissions in the supply chain.

Ten years after CDP started collecting supply chain data on behalf of the world’s largest purchasing organisations, 115 organisations – representing a combined annual spend of more than US$3.3 trillion – are now requesting data from over 11,500 suppliers.

This is more than a 15% increase from last year, when 99 organisations requested data.

Sonya Bhonsle, Head of Supply Chain at CDP, commented: “With emissions in the supply chain on average around four times greater than those from a company’s direct operations – and rising to up to seven times greater for retailers and consumer-facing companies – large multinational corporations cannot comprehensively address their environmental impact without looking to their supply chains.

“It’s very encouraging to see so many of the world’s biggest buyers taking supply chain sustainability seriously. By requesting data from their suppliers, they are shining a light on the risks hidden deep within their production chains – and uncovering a myriad of opportunities for reducing their overall environmental footprint, boosting innovation and cutting costs.”

The rise in companies scrutinising their supply chains coincides with growing momentum behind the take-up of science-based targets – goals that allow companies to reduce their emissions in line with the decarbonisation required to keep global temperature increase below two degrees Celsius, the central aim of the Paris Agreement.

The Science Based Targets initiative (SBTi), which helps companies develop and approves such targets, requires companies to set scope 3 targets if their scope 3 emissions account for at least 40% of their total emissions. For global retailers that do not manufacture many of the products they sell, scope 3 emissions in their supply chain can be far greater than 40%.

Read more at Retailers worth $3.3trn scaling up supply chain sustainability

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