Unlocking supply chain due diligence during the lockdown

The COVID-19 pandemic is forcing businesses across the world to radically re-think how they operate. In the world of responsible sourcing and supply chain due diligence, the ability to travel to physically visit suppliers to assess their operations has been taken as a given. Indeed, many global brands are almost wholly reliant on an army of auditors assessing suppliers against certification schemes or industry audit protocols.

So, what do you do when travel is no longer an option? And is the widespread reliance many companies have on social compliance auditing even healthy?

If nothing else, now is a good time to be asking such questions. Whilst site-based assessment will remain a critical part of the responsible sourcing ‘toolkit’, we believe the enforced restrictions to ‘business as usual’ can be put to good effect to strengthen companies’ responsible sourcing programmes. There are some key steps all companies can take during this time.

1. Take a step back

There has rarely been such a good time to take stock on existing approaches. This could include a full strategic re-think and answering, honestly, some key questions about the existing responsible sourcing approach:

• What is working? What isn’t? And why?
• Are we meeting our goals?
• Are we leaders or laggards in our sector? How do we feel about that?
• Is what we do truly aligned to good practice frameworks for responsible supply chains, such as those developed by the OECD?
• How confident are we that the current approach is effectively managing, mitigating or eliminating risks?

This sort of exercise should cover all current aspects of different topics, from purchasing practices to managing risks in raw materials. By asking serious questions, new decisions may be taken, new approaches developed.

Take the example of compliance and certification audits. How much money is currently being saved by audits that are not being delivered? How effective were these audits, even when they were being delivered? Could this money be used for better, more effective approaches?

2. Map, assess and prioritise

Now is the perfect time to begin or continue mapping your supply chain. The purpose of supply chain mapping is to identify the flow of materials and processes through the supply chain, in order to prioritise supply chain due diligence efforts. Whilst mapping can be incorporated into on-site supplier assessments, this time of travel restraints can be efficiently used to obtain an initial map of suppliers and raw material flows.

Technology can help. At Kumi we have a partnership with a technology firm that developed a platform designed specifically for supply chain mapping. The platform enables a supply chain map to be quickly developed through a web-based tool that uses data visualisation to build up the supply chain map, identifying material flows and supply chain interdependencies with minimal efforts required by companies within the supply chain.

Of particular relevance for mineral and metal supply chains, Kumi is about to launch a new digital tool called CAHRA Map. This platform enables companies to identify conflict-affected and high-risk areas (CAHRAs) in order to quickly and efficiently understand risks and due diligence priorities globally.

The importance of desk-based supplier due diligence should not be underestimated. Many companies have extensive supplier due diligence processes for their direct suppliers but undertake little, if any, due diligence on suppliers further down the supply chain. Building on mapping of the supply chain, concise, targeted surveying of indirect suppliers can become a key mechanism for risk prioritisation and supply chain engagement, guiding decisions and human rights compliance strategies moving forward.

3. Train your staff

Use this time to develop the capacity of your staff and colleagues. We would recommend a particular focus on staff outside of the sustainability team, such as procurement personnel, as these are central to the success of a responsible sourcing programme but in normal times may often be hard-pressed by the day job and difficult to pin down.

During this time, we therefore recommend providing targeted training on topics most relevant to the ‘day job’ of staff in such departments. For example, many companies have staff who engage directly with suppliers for the purposes of ensuring quality or quantity of product. Such staff can be the ‘eyes and ears’ of the responsible sourcing programme, helping early identification of potential risks and the implementation of effective risk management or performance improvement measures.

Once topics have been selected, it’s possible to develop unique and creative ways to deliver content in attractive, remote working friendly packages. Of course, this could even be extended to the supply chain, so that when your suppliers get back to work, they can do so with additional knowledge and understanding of your expectations.

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If you’d like to know more about how Kumi can support you in strengthening your company’s approach to responsible sourcing and sustainable development, please get in touch.