A licence to grow

Jul 08 2002 by Brian Amble Print This Article

Key business issues any employer is likely to face must centre on the development of a 'licence to grow' and the supply chain.

These issues were perceived either as barriers or opportunities in the achievement of their business visions and as such costs or value to the bottom line.

Value equation
One key point which arose in a recent roundtable we held is the 'value equation' in supply chain and the fact that in many cases the risks and the opportunities are not being measured.

As such they represent both hidden costs and hidden value. How can these be identified and why?

The answer lies in a more holistic approach to working with stakeholders.

Only by working with all stakeholders from end consumers, employees and local communities to opinion formers can relevant measures or key performance indicators of value and risk be developed.

These measures can then be used to build the business case and ensure the process itself is sustainable and continues through economic downturn, as it is clear for all where the value lies.

It's essential to get key stakeholders involved right at the start. The key to resolving supply chain issues is the recognition that improved participation from the earliest stage leads to innovation and sustainable business.

It is also important to create deeper, participative relationships with suppliers and subcontractors. Dialogue between the many parties in the supply chain is the only way to develop a real understanding of the needs of each party and the issues and constraints they face.

Beyond efficiency
True value is in the potential to identify, manage and innovate around supply chain risks as well as opportunities.

It is here that we work with organisations and help them to move beyond efficiency to innovation and value creation in the supply chain.

The indicators set up with stakeholders as part of this process can then be used to demonstrate the bottom line delivery leading to sustainable business.

It is a fact of life that there are still companies that simply source product from the cheapest place in the world. This can lead to real control problems in the supply chain.

So what can be done to ensure that when products are sourced that they are not based on the lowest common denominator, price, leading to compromises in key areas such as child labour?

A recent conversation with deBaer Plc who design, manufacture and distribute corporate wear and work with a supply base of global manufacturing partners highlights the fact that UK organisations do want reassurance that underage children are not being used.

It also showed that unannounced visits from production mangers and stringent audits are now essential.

Global operators
However, the complexity and changing nature of the supply chain make it increasingly difficult to predict and plan. This is especially true in the area of global operators who can switch sourcing very quickly.

By implication, this process will involve 'middle men' who can be a challenge to identify and engage.

Last but not least it's crucial to remember the consumers. Most high-street brands are greatly concerned about how they are viewed by consumers.

If they do not take social and ethical issues seriously an support and demonstrate this in their supply chains they may not be around in ten years time.

In fact, the term 'ethics' can be misleading. In today's business climate the key phrase used is that of `values`. In other words how do we want to be treated and how do we want to treat others.