1. THE INSTITUTE OF LEADERSHIP & MANAGEMENT Spotlight on Know Your Suppliers Supply chain owns sustainability - Everyone likes to talk about social and environmental responsibility, and CSR reporting gets pretty glossy, but almost all real impact rolls straight up into supply chain. Kevin O'Marah (2017) Supplier Responsibilities Your organisation needs to know that all your suppliers take their responsibilities for good customer service, to the environment, communities and ethics as seriously as you. Increasingly complex, global, and extended supply chains and outsourcing make this very important for sustainability. Regularly finding new suppliers and setting up contracts is costly, risking poor quality or failure to deliver on time, which can seriously affect your organisation's reputation. Rather than constantly changing suppliers to reduce cost, organisations often look for stronger relationships with a smaller number of trusted longer term suppliers, offering a combination of quality, reliability, good service and communication, and therefore overall good value for money. This is a 'win:win' result in which: YOU ACHIEVE: Confidence that supplies will be delivered when needed Good relationship; responsive service; prioritising when necessary A more streamlined organisation Best value, preferential pricing or special terms Reduced risk Managing the Supply Chain YOUR SUPPLIER ACHIEVES: A regular, reliable customer A reliable payer and better cash flow Information on future requirements or good notice of changing demand Working relationship with good communication and Information flow Reduced risk Many organisations establish supplier management initiatives such as due-diligence sourcing audit/ control systems to build a detailed understanding of suppliers, whatever their size, and sometimes globally. Environmental, social and ethical considerations are now part of how many organisations evaluate and select suppliers. Ethical sourcing helps to reduce risk, protect your brand reputation, and is a way of gaining competitive advantage. This means you need a process capable of assessing and verifying suppliers' overall risk profiles to make informed procurement decisions. Risk grows as the supply chain becomes more complex. Aspects of suppliers that organisations audit should include: EVALUATION OF: . Capabilities/technical suitability Quality certifications Business operations Financial accounts Credit ratings .Policies Reviews on environmental performance TO GUARD AGAINST: . Omissions e.g. concealing failure, poor management, business inefficiencies excess Inventory, low wages, complex borrowing arrangements, slow cash flow, poor culture . Company sanctions, politically exposed directors, bribery, corruption, money-laundering, Insider- trading, conflict of Interest How the organisation motivates and rewards people .Presence of a business continuity plan in event of a failure Serious impact of natural or environmental disaster Environmental risk in production, products unnecessarily incapable of being recycled, absence of eco-labels, energy star standards . Unsafe, unsatisfactory workplace Discrimination or unreasonable terms of employment . Use of child labour Suppliers who unnecessarily damage the environment in the way they produce, consume and dispose of materials, who perform poorly in relation to human rights or where serious ethical issues are identified, are normally excluded. Potential and existing suppliers are monitored. Some organisations decide on standards of supplier measurement, automate the vast quantity of data, and set up visual performance dashboards showing how well the supplier is performing against their contract. For example: Current Fill Rate 50 94.96 % Fill Qty - GID SUPPLIER Monthly Trends 110 102 DASHBOARD Fill Rate by Distribution Channel After Market-Intl After Market-Dom Domestic Trade Inter-Co Domestic International Trade Jan Feb Month/Year Mar 0 25 50 75 100 100 Fill Rate Analysis % Fill Qty - GID 32396A30 4F759F33 1D19511A8 SFD4064 54FFB349 103F97D0 39C90473 7A268831 Part Description Suppliers as Strategic Partners Good leaders view their suppliers as strategic partners, getting to know them and collaborating with them to Improve efficiency and reduce waste and error on both sides, and looking for ways to add value, such as improved health, safety, environmental sustainability or ethical compliance. To know your suppliers: COMMUNICATE COLLABORATE BUILD TRUST Keep in contact; listen; learn about them to build a good working relationship. A visit is a great opportunity to get to know them Appreciate their needs, opinions and difficulties; be clear and straightforward about yours so that you can work for mutual benefit Be honest and open with non-confidential information. Share your aims so your supplier is clear about your needs and whether/when they might change. BE FLEXIBLE Be prepared to suit your suppliers' needs wherever possible. Show a willingness to work for mutual benefit References Gordon, S (2014) Supplier Evaluation and Performance Excellence J. Ross Publishing O'Brien, J (2014) Supplier Relationship Management Unlocking the Hidden Value in Your Supply Base Kogan Page O'Marah, K (2017) "Ten timeless truths of supply chain" Forbes www.forbes.com/sites/kevinomarah/2017/08/10/ten-timeless- truths-of-supply-chain Learning Cluster 25.3. Published by The Institute of Leadership & Management 2018 The Institute of Leadership & Management The Institute of Leadership & Management, Pacific House, Relay Point, Tamworth B77 5PA. www.InstituteL.M.com ++44 (0) 1543 266886