The path to greater innovation in supply chains may be different for every organisation but the ultimate goals will be the same – obtaining better value from suppliers, developing resilience against disruptions and finding new ways to continue to serve the business and its customers during good times and bad.
The knocks and diversions of the pandemic have encouraged supply chain managers to put renewed focus on innovative practices such as collaborating with competitors towards common goals or introducing multiple logistics strategies where once a handful of reliable suppliers was enough. As we emerge from the most difficult challenges in many generations, this spirit of innovation should say with us, continually driving for improvements in our supply chains to meet not just the strategic goals of the business but support societal good.
Looking at technological developments in supply chains is a good place to start. As businesses compete to get ahead in the digital race, mere investment in technology is not enough. What businesses need is increased agility and transparency of their suppliers and their suppliers’ suppliers and an understanding of how technology can bring this transparency and increase true value across the supply chain.
Our research last year found that 70 per cent of the businesses surveyed had used digital solutions to increase the performance of their supply chains, improving information, reducing operational costs or eliminating human error using automated systems. As data becomes the “new oil”, this is encouraging. During the pandemic, businesses were struggling to get hold of the latest information on where suppliers were still operating or where supply chains were broken, so this transparency is likely to become increasingly important.
Innovation cannot just be about increased cost-efficiencies but a driver of bigger goals. Organisations are dedicating more resources than ever to sustainability or social value initiatives and are thinking more about what their purpose is – not just about profit to shareholders but what they are delivering for society. Consumers think about which brands they are going to buy, employees what type of company they want to work for, and investors are savvier about who they are investing in. What they all have in common is that they want to deal with reputable businesses doing the right thing. What are businesses doing to eradicate labour violations, for instance, eliminating modern slavery or rooting out bribery and corruption in their supply chains?
Though the UK has the Modern Slavery Act, the German government has taken this approach further. The Supply Chain Act of 2021 is being lauded as the strongest legislation in Europe against exploitation of workers, where companies with more than 3,000 employees (the legislation will later be expanded to include those with more than 1,000 employees) will be truly accountable for human rights breaches.
I would like to see measures strengthened in the UK. The charity Focus on Labour Exploitation says that half of construction workers in London don’t have a contract, a third are not paid, another third abused and 50 per cent work in dangerous conditions. How can this continue in a civilised society?
The lack of prompt payment is another bugbear. In October 2020, the UK government gave the Small Business Commissioner stronger powers to support SMEs who were struggling with late payments from larger corporate customers. £23.4 billion is owed to SMEs according to official statistics, so paying suppliers on time, or even early, should be part of every organisation’s responsible payment policy.
What is clear from the lessons of the pandemic is that only the most agile and adaptable of companies were ready to manage the ebb and flow of lockdowns and disruptions to shipping lanes across the globe – and only a few managed this successfully. As we emerge from the worst of Covid’s impact, companies are now looking towards building more resilient and ethical supply chains in preparation for the challenges still to come and using innovative thinking to fuel those goals.
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