Manage Supply Chain Risk, Reap ESG Rewards

Innovation Manage Supply Chain Risk, Reap ESG Rewards Svetlana Zenkin Brand Contributor ServiceNow BRANDVOICE Storytelling and expertise from marketers | Paid Program Peter Hennig Brand Contributor ServiceNow BRANDVOICE Storytelling and expertise from marketers | Paid Program Jun 22, 2022, 05:05pm EDT | Share to Facebook Share to Twitter Share to Linkedin How to take control of your supply chain to meet today’s ESG expectations. “Global supply chain disruption” probably ranks just behind “unprecedented” and “pivot” when businesses talk about the past two years. However, interest in environmental, social, and governance (ESG) monitoring and reporting as part of supply chain management is not new, and can be used to improve your company’s resiliency and accountability.

It’s 2022—how well do you know your vendor supply chain? getty While ESG reporting is still largely voluntary, a broad set of stakeholders now demand increased visibility into ESG-related risks . Many asset management companies and institutional investors now view ESG risks as financially material to their investment decisions. On the regulatory front, the European Union’s Sustainable Finance Disclosure Regulation went into effect in March 2021, and the U.

S. Securities and Exchange Commission has indicated that ESG disclosure regulation will be a focus for the SEC. In addition, many consumer-facing companies require manufacturers in their supply chain to complete mandatory ESG forms and audits.

Risks and rewards According to the Deloitte 2020 Extended Enterprise Risk Management (EERM) survey , organizations are investing in key third-party risk domains, including climate risk (74 percent), environmental risk associated with air pollution and water waste (57 percent), and labor and modern slavery risk (54 percent). Manufacturing supply chain challenges range from poor management of labor practices and human rights to the origin of raw materials. All of these can create both risks and opportunities for manufacturers.

Manufacturers need better tools to manage the ESG impacts of their supply chain while avoiding painful breakdowns. For example, being able to track and certify that all your sourced materials (such as timber or metals) come from sustainable sources can be a product differentiator from a social and environmental standpoint. And that process can reveal ways to source for resiliency at the same time.

If you love your sugar supplier’s labor practices but they’re in an area routinely threatened by hurricanes, for example, perhaps you also source from an alternative, equally labor-sound supplier whose storm season is different. As the risks expand while the reward for getting it right grows, manufacturers need better tools to manage the ESG impacts of their supply chain while avoiding painful breakdowns . Take control of your supply chain Many manufacturers don’t have much visibility into their supplier community, let alone a unified view of ESG factors and risks.

They rely on reactive, manual processes—or have information housed across multiple systems and antiquated methods like spreadsheets and email threads. As a result, they lack efficient management, analysis, or reporting. This constitutes both a potential supply chain fragility and a potential ESG issue, and it can result in operational and reputational damage.

Manufacturers need to gain full transparency into their supplier mix to improve quality, reduce risk, and take greater command of their ESG data in preparation for stakeholders’ reporting demands. Here’s how: · Map the supply chain: Get transparency into products, processes, and suppliers—including geographic and operational risks—to focus efforts to improve quality and sustainability · Assess risk: Identify potential risks of sourcing from certain suppliers or operating in specific geographies to improve decision-making prior to production · Trace products: Allow for monitoring of goods throughout production and across borders, increasing consumer trust in the end product · Comply with customer audits: Enable faster and more accurate responses to varied customer forms; improves efficiency and reduces burden on supply chain employees With Deloitte and ServiceNow’s Connected Supply Chain Control Tower , you can do all of the above, ultimately taking control of your supply chain, turning visibility into value and making automation your advantage. Our approach combines performance analytics with continuous improvement to create a more efficient, resilient, and agile supply chain with greater visibility for analysis and reporting.

As the ESG imperative ramps up, manufacturers need to get their supply chain sussed out. With new technologies like the Connected Supply Chain Control Tower, they can. Svetlana Zenkin Peter Hennig Editorial Standards Print Reprints & Permissions.