The notion of “globalization” as it applies to commerce is old hat now. But as multinational companies continue to grow, their global supply chains necessarily continue to grow more complex in tandem. That such firms have an ever-more-compelling motivation to keep a close eye on their overseas suppliers is basically a throwaway statement.
Yet, for the most part only the largest companies are engaged in anything that could be considered a thorough program of auditing supplier practices. In part that’s because it’s an expensive proposition, to say the least, to audit all of your suppliers’ factories, warehouses, and distribution centers multiple times per year — let alone audit the suppliers’ suppliers, which is also becoming increasingly important.
Also thwarting aggressive supply chain audits is a fast-expanding roster of international, federal, and state laws and regulations affecting supply chains. The cost of faulty compliance with such edicts, the most recent of which is the U.K. Modern Slavery Act of 2015 (U.K. Act), include enforcement actions with monetary penalties, reputational damage causing the loss of customers, and class-action lawsuits from plaintiffs on the lookout for unfair business practices.
A third big reason for corporate malaise with regard to supply chain audits is simply an “it-won’t-happen-to-me” mindset. But once it does happen to you, you may have cause to reflect on what should’ve been.
The first article in this package explores many of these issues. Also included here is an article from T. Markus Funk, an attorney focused on supply chain compliance, providing advice for companies in dealing with the U.K. Act and other laws and regulations that seek to stem the use of coerced and child labor in the manufacture of products or the mining of materials.
Rounding out the package, supply chain consultant Shawn Casemore provides a tutorial on how CFOs can contribute to a strategically sound supply chain operation, and Regenia Sanders and Jason Meil of management consulting firm SSA & Co. offer thoughts on how big data and analytics can unlock hidden value in the supply chain.