Learning & Development / Future of supply chain

Future of supply chain

What is fair trading and how can it help sustainability?

The ethical approach to trading is both a global and a local challenge.  

According to the Fairtrade Foundation, fairtrade sets social, economic and environmental standards for both companies and the farmers and workers who grow the food we buy every day at our supermarkets. The standards include protection of workers’ rights and the environment and the payment of the Fairtrade Minimum Price.

Fairtrade also applies to the supply chain. The foundation independently checks that its standards are being met by farmers, workers and the companies that are part of products’ supply chains. Consumers eager to purchase these ethical products look out for the Fairtrade Mark on the product packaging. For companies looking to link up with Fairtrade, the foundation compares its existing supply chain strategy with those core principles, such as being paid a fair price. The foundation is trying to encourage more private companies to work together on creating higher quality and more secure supply chains, but believes that concerns over breaking competition laws act as a barrier. Jessica Runicles, Programme Manager, Benchmarks, Insight and Innovation at Business In The Community, which aims to build more responsible businesses, says SMEs are increasingly keen to engage with their suppliers. “Bigger clients and consumers are asking more questions of SMEs. They, because of their smaller size, know their suppliers well. They need to identify the most important risks and focus on them,” she says. “Those SMEs with chain which takes in developing countries are more aware of the need for change, but this isn’t just an international issue. It is also a domestic problem and firms need to be looking at uses of slavery, especially amongst immigrant workers in the UK.”

Fairtrade also applies to the supply chain. The foundation independently checks that its standards are being met by farmers, workers and the companies that are part of products’ supply chains. Consumers eager to purchase these ethical products look out for the Fairtrade Mark on the product packaging. For companies looking to link up with Fairtrade, the foundation compares its existing supply chain strategy with those core principles, such as being paid a fair price. The foundation is trying to encourage more private companies to work together on creating higher quality and more secure supply chains, but believes that concerns over breaking competition laws act as a barrier. Jessica Runicles, Programme Manager, Benchmarks, Insight and Innovation at Business In The Community, which aims to build more responsible businesses, says SMEs are increasingly keen to engage with their suppliers. “Bigger clients and consumers are asking more questions of SMEs. They, because of their smaller size, know their suppliers well. They need to identify the most important risks and focus on them,” she says. “Those SMEs with chain which takes in developing countries are more aware of the need for change, but this isn’t just an international issue. It is also a domestic problem and firms need to be looking at uses of slavery, especially amongst immigrant workers in the UK.”

How do I ensure CSR values go through the supply chain? 

You need every stakeholder, from c-level executives to all suppliers, to sign up for the project.    

Last year Gartner, in its well-regarded Supply Chain Top 25 list, added a new methodology to its best practice rankings – corporate social responsibility. “Beyond profit, leading companies also focus on people and protecting the planet,” Gartner stated. Highlighted examples within the industry included Unilever’s Sustainable Living Plan, designed to cut the environmental footprint and use of its products by half, and Cisco’s partnership with suppliers and the use of digital technologies to cut a million metric tonnes of carbon emissions from its supply chain by 2020.

For these businesses and others to achieve such goals, they must get buy-in from their C-suite and suppliers. It must be made clear that by following CSR strategies companies can reduce costs and improve efficiencies in the supply chain, as well as boosting reputation and value with consumers and investors.

Businesses should inform suppliers about their procurement policies when it comes to sourcing raw materials or minerals. Ideally a code of conduct should be drawn up and shared with suppliers, listing policies on labour and human rights, environmental conservation and health and safety. Regular assessments and reviews should be put in place and improvements made.

Businesses should inform suppliers about their procurement policies when it comes to sourcing raw materials or minerals. Ideally a code of conduct should be drawn up and shared with suppliers, listing policies on labour and human rights, environmental conservation and health and safety. Regular assessments and reviews should be put in place and improvements made.

Jessica Runicles of Business In The Community agrees that partnership and communication is vital. “Engage with suppliers and discuss the importance of adhering to these values. Try and make changes but consider de-selection of suppliers if necessary,” she says. Vikas Shah gives a supplier’s perspective: “There is a tendency in many markets toward short-termism, which is very dangerous. In this sense, I am referring to the tendency of buyers to chop and change suppliers regularly, to put undue and commercially unreasonable pressure on suppliers and also to threaten supply chains with loss of business to meet certain price points,” he says. “If you truly believe that CSR values and ethics are paramount in your supply chain, you need to build long-term, commercially and ethically sustainable supply chains.”

                                                     

What future technological changes should I be planning for?

Blockchain promises to change the level of transparency in the supply chain.                                                           

The supply chain is a hotbed of technological development, from early adoption of blockchain to the use of virtual and augmented reality in the warehouse. Businesses need to keep looking and learning about new developments which will improve efficiencies, reduce cost and ramp up quality.

Blockchain is slowly moving from the world of hype into reality in the supply chain sector. Major companies, from US retailer Walmart to global shipping group Maersk, have launched trials looking into how they can respectively improve food safety and security through enhanced tracking and traceability and digitise global shipping across borders. “It is in its infancy at present but blockchain promises to change the level of transparency in the supply chain,” says Andrew Black of Efficio.

Gary Clark’s Cooper Software is conducting its own trials, not in blockchain but in augmented reality. “We are developing the use of Google Glass and voice technology in the warehouse, which we intend to then put into our early customer adopter programme,” he explains. “The glasses are helping with order picking as they tell the operator which locations to go to and even scan barcodes. The operator’s voice then updates the system when the order is picked. It takes training and some operators have talked about tired eyes when using the glasses, but it is about setting it up with the right environment.”

Gary Clark’s Cooper Software is conducting its own trials, not in blockchain but in augmented reality. “We are developing the use of Google Glass and voice technology in the warehouse, which we intend to then put into our early customer adopter programme,” he explains. “The glasses are helping with order picking as they tell the operator which locations to go to and even scan barcodes. The operator’s voice then updates the system when the order is picked. It takes training and some operators have talked about tired eyes when using the glasses, but it is about setting it up with the right environment.”

Cooper Software believes the use of artificial intelligence in inventory management will also gain ground in the next two or three years. “Every conference you go to AI is mentioned. In a warehouse it could be used to better analyse the behaviour of customers and to improve forecasting and re-ordering,” says managing director Frank Cooper.


Originally published in Business Reporter Online: June 2018

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