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Wrapping up the series: Governance and supply chain

5/23/2022

The last two weeks we discussed the environmental and social portions of ESG factors and impacts. As a reminder, ESG stands for Environmental, Social, and Governance. Today’s focus is on the governance aspect.

Governance factors are typically seen in the form of structures or policies to ensure risk reduction or mitigation. For example, one of our Just-In-Times issues a couple months ago referenced an article where an Apple employee that managed to defraud the company to the tune of $10M. This situation should have never been able to occur if there are the proper policies and structures in place to prevent a purchasing professional from operating without proper supervision and signoffs.

There are some steps in supply chain we can do to ensure a better governance outlook for our teams:

Structure: Implementing the appropriate structure in your supply chain is one key to improve governance in the ESG framework. It is crucial that a segregation of duties is clearly defined to prevent conflicts of interests that may enable one employee or group to leverage a position and put the company at risk. This includes seeking the proper approvals
Policies: Structure is one step in improving a company’s ESG, but policies also need to be in place. One example of policies being in place is identifying conflicts of interest and helping employees understand how to report conflicts of interest. Another example is creating standard operating procedures, or SOPs, to ensure employees are operating by the rules and following the benchmark. Having documented procedures also helps to protect the company and team in the event of an employee leaving the company. A talented employee may be leaving, but the company is safeguarded in some way by having SOPs in place.

These are just two simple examples of governance, but the positive dividends they will pay are unquantified. While rounding out our series on ESG - it is imperative to ensure your organization has proper governance in place.

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Exploring the social impacts surrounding supply chain professionals.

5/9/2022

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Last week, we discussed the environmental portion of ESG factors and impacts. As a reminder, ESG stands for Environmental, Social, and Governance. Today, we are going to focus on the social impacts surrounding supply chain professionals.

When we look into the social aspects of ESG in supply chain, we are looking at benchmarking and investigating what types of companies and suppliers they work with. We also consider the safety and health of employees working for the company. These are critical factors to consider, now more than ever. We are experiencing one of the hottest job markets, meaning employees are feeling empowered to require the best salary, but also, the best working conditions and circumstances. People are talking about treatment of employees constantly, and it is important to do the best by your employees if you plan to retain top talent.

There are some steps in supply chain we can do to ensure a better social outlook for our teams:

Employee Safety: Employee safety is an absolute must. No company can maintain that they care about their employees while copious incidents and injuries are happening on the job. This also means clean working conditions and proper equipment as well as removal of harmful substances such as asbestos.
Employee Relations: In today’s environment, ensuring positive employee relations is a top priority. This may include flexible work arrangements, a cafeteria on-site, excellent benefits, and/ or compensation or recognition for achieving and exceeding company goals.
Diversity and Inclusion: Ensuring equal opportunities for people of all different backgrounds and identities is another way to ensure a company is achieving social success in the ESG framework.
Human Rights: A top contribution supply chain leaders can make is ensuring that human rights are being met. This has been a major focal point for years as many companies have been called out for using second or third tier suppliers with unethical business practices. It is our due diligence as supply chain professionals to ensure a company we are working with is not only upholding basic human rights, but also implementing business practices that we can be proud of as an organization.

It should also be noted a big part of the social category is community contributions and relations. This is sometimes more difficult for supply chain to play a role in, but is not impossible. The supply chain team is often innovative with great ideas, so bringing ideas to light that could help engage the community from the supply chain team can be very helpful.

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Supply Chain Tomorrow Blog

Wrapping up the series: Governance and supply chain

Exploring the social impacts surrounding supply chain professionals.

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