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: YOUR SUPPLIER ACHIEVES: Confidence that supplies will be delivered when A regular, reliable customer needed A reliable payer and better cash flow Good relationship; responsive service; prioritising Information on future requirements or good notice of when necessary changing demand A more streamlined organisation Working relationship with good communication and Best value, preferential pricing or special terms Information flow Reduced risk Reduced risk Managing the Supply Chain 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 . How the organisation motivates Business operations . Policies and rewards people - Financial accounts . Reviews on environmental . Presence of a business continuity . Credit ratings performance plan in event of a failure TO GUARD AGAINST: . Omissions e.g. concealing failure, poor management, . Serious impact of natural or environmental disaster business Inefficiencies excess Inventory, low wages, . Environmental risk In production, products complex borrowing arrangements, slow cash flow, unnecessarily incapable of being recycled, absence poor culture of eco-labels, energy star standards . Company sanctions, politically exposed directors, Unsafe, unsatisfactory workplace bribery, corruption, money-laundering, Insider- Discrimination or unreasonable terms of employment trading, conflict of Interest 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: SUPPLIER DASHBOARD Current Fill Rate Monthly Trends Fill Rate by Distribution Channel Fill Rate Analysis After Market-Int 50 102 94 After Market-Com 101957148 7A268 531 4 759 F33 103P97DO 54FF8340 39030473 86 domestic Trace % FI Qty - GID GFD4064 94.96 78 ter-Co Domestic 30 Jan Feb Ma International Trade Month/Year 25 50 75 100 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 Keep in contact; listen; learn about them to build a good working relationship. A visit is a great opportunity to get to know them COLLABORATE Appreciate their needs, opinions and difficulties; be clear and straightforward about yours so that you can work for mutual benefit BUILD TRUST 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, 5 (2014) Supplier Evaluation and Performance Excellence I 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 877 SPA . www.InstituteLM.com - +44 (0) 1543 266886