5 tips for managing supply chain disruption
Global crises in recent years have affected supply chains in many ways, from rapid changes in consumer demand to transport delays and labour shortages. These challenges have increased pressure on businesses and their supply chains to deliver the same quality products in the same timeframes while balancing these additional operational difficulties.
Additionally, investors and other stakeholders expect companies to measure their impact on the people and the planet and provide evidence of these sustainable practices. Meeting these expectations can contribute to managing and preventing supply chain disruption. Consequently, businesses’ ability to negotiate frequent disruption in their supply chain is more critical than ever to long-term success and resilience.
What is supply chain disruption?
Supply chain disruption is the disturbance of an organisation’s normal operations and product network. Depending on the disruption level, it may impact productivity, business reputation or profit, as well as the people working for the organisation or their suppliers.
Today’s global supply chains are at constant risk of disruption, and the risk typically increases with greater supply chain complexity. Therefore, the level of impact for a business may vary depending on the infrastructure and resilience of their supply chain.
Putting people and the planet at the core of company strategies, through responsible business practices, helps to anticipate the potential impacts of supply chain disruption and develop better-informed responses. Moreover, these responsible practices also support companies to meet their sustainability goals, including addressing stakeholders’ demands.
Tips for managing supply chain disruption
1. Increase visibility by mapping your supply chain
You can only manage what you can measure. For that reason, to increase visibility and identify environmental, or social risks, you need to map your supply chain. In fact, getting started can be a simple process with the right tools.
Mapping your supply chain increases the visibility of your suppliers. Subsequently, once your supply chain is mapped, you can start learning about your suppliers’ processes, their working conditions, and their environmental impact.
Mapping your supply chain also enables your business to prioritise areas of concern and distribute your resources accordingly.
2. Use technology to identify and manage supply chain risk
Digital technology is a powerful enabler for business innovation and risk mitigation. As a matter of fact, there are several tools that can facilitate supply chain risk management right down to your lowest tiers.
Sedex’s Radar risk tool, for example, helps businesses understand human rights and environmental risk across global supply chains and prioritise acting on areas of extreme concern. In addition, Radar also provides over 340,000 individual risk scores to efficiently assess, compare, and respond to supply chains’ environmental, social and governance (ESG) risks.
3. Work in collaboration with suppliers to run a sustainable supply chain
A sustainable supply chain considers both the environmental and social impact of business activities. To help with this, collaborating with suppliers can have a positive impact along your supply chain and contribute to more sustainable business practices.
Setting environmental and social standards for your operations and supplier’s operations is an excellent way to drive more sustainable supply chain practices. Start with talking to your suppliers to define these standards. This may help you understand better what goals they can meet easily and where they might need more support. Also consider what help your business can provide – such as training and guidance.
4. Stay up to date with the latest legislation
Legislation is constantly evolving, introducing new requirements for businesses to conduct more ethical operations and to provide evidence of this. Is important to note that different laws will apply depending on where your business is based, the market it operates, the size, turnover and sector.
Key legislation that has already come into force or will be effective soon includes:
- Norway’s Transparency Act effective from 1 July 2022
- Germany’s Supply Chain Due Diligence effective on 1 January 2023
- The European Union’s (EU) mandatory human rights and environmental due diligence legislation (mHREDD), published in February 2022; further timelines to be determined
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5. Build resilience by proactively preparing for disruption
The best way to manage supply chain disruption is through preparation and planning. Consequently, when you understand what disruption may occur, and how your supply chain might be affected, you will be better prepared to deal with a crisis.
Proactive risk management, for example, should incorporate global events and risks directly linked to your company’s operational landscape, as well as the operations of your suppliers.
Building a resilient supply chain is an ongoing activity that requires collaboration, agility and proactivity. Despite the complexity of global supply chains, many tools and resources exist to build detailed visibility, identify risks and support effective planning for future disruption. Use today’s data and technology to your advantage to draw insights and drive more sustainable business operations.
How Sedex can help
Sedex offers a variety of tools and expert advice on building supply chain resilience through sustainable business practices. Using technology and data, Sedex can help you manage your supply chain disruption risks and achieve your business sustainability goals.
- The Sedex platform allows you to store, share and report on supply chain information and manage supplier performance on health and safety, due diligence and ESG goals.
- Use a Self-Assessment Questionnaire (SAQ) to gather data about activities and working conditions across your supplier sites.
- Our risk assessment tool helps you identify social and environmental risks across your supply chain and compare inherent risks in relevant countries and sectors.
- Our Consulting team can design a holistic supply chain management plan that focuses on your business priorities and delivers tangible change for you and your key stakeholders.