Supply chain transparency has become a pressing concern for business leaders, regulators, and stakeholders alike. With regulatory requirements, technological advancements, and increased consumer awareness driving change, organisations are navigating complex and interconnected challenges. Here are some key considerations to enable transparent and compliant supply chains.
1. The spirit of regulations is about impact
Regulatory frameworks such as Section 1502 of the Dodd-Frank Act have profoundly influenced supply chain transparency and traceability. Aimed at 3TG minerals (Tin, Tantalum, Tungsten, and Gold), this law was designed to promote responsible sourcing through greater disclosure and reporting and over the years, it has influenced a bigger movement leading to enhanced supply chain due diligence. Such regulatory requirements are unique in compelling companies to think beyond just compliance and focus on the broader impact of their operations on stakeholders.
2. Technology is a facilitator, but not a fix-all
Technological tools like SaaS platforms offer the capability to manage complex and large data streams, which is often the nature of supply chain management. We know that companies’ sustainability priorities, risk appetites and local dynamics of their operations and suppliers are essential to factor into effective supply chain management. Technology cannot replace the human element of supplier relationships, or the contextual understanding needed for on-the-ground assessments. A balanced approach combining data, data analytics and human intelligence, is critical for success.
3. The two-way street of impact: Downstream influences upstream
As supply chain transparency efforts grow, organisations are fully grasping just how interconnected supply chains really are. What happens downstream is likely to have an impact on what happens upstream. For instance, increased consumer awareness of conflict minerals has helped drive brands to source more responsibly - which ultimately has had an impact on mining practices upstream. This type of relationship underscores the interlinked nature of modern supply chains and the importance of considering impacts at all stages.
4. Relationship-building: The key to effective data sharing
Building trust and strong relationships with suppliers is essential for meaningful data sharing. While technology can aid in collecting and managing data, the challenge often lies in accessing this data in the first place. The solution, as suggested in “The Good Idea” podcast, is "more relational than it is informational," emphasising the need for industry engagement, norm setting, and robust supplier relationships to facilitate effective data sharing and problem-solving.
5. Industry collaboration: The keystone of effective supply chain management
The intricacies of global supply chains make it nearly impossible for a single entity to monitor its entire supply chain. Collaboration across industries, sometimes even among competitors (with the usual anti-competitive cautions), is becoming the new norm for having a reliable understanding of the dynamics of supply chains. Shared databases, regular engagement with suppliers, and industry-wide standards can bring about meaningful improvements in transparency and accountability.
Supply chain transparency is a key focus of compliance functions today. Regulatory pressures, industry collaboration, technological advancements, and stakeholder engagement are all contributing to a more complex, yet potentially rewarding, landscape for organizations. As companies adapt and evolve, it's essential to maintain a balanced approach that combines compliance with a focus on making a meaningful impact.
For a more in-depth discussion on this issue, join Maria Knapp, Yadaira Orsini and Microsoft’s J.J Messner DeLatour on the second episode of our ESG podcast “The Good Idea” where they discuss if Compliance’s growing role in ESG is a good idea. Listen to the full episode here.