Three ways non-executive directors can help the board to manage supply chain risks and consequences

Are human rights, slavery and supply chain issues inextricably linked, or are they separate to each other? Where do distinctions need to be drawn and what are the big issues to worry about? This is a complex area that requires diligence and strategic thinking to make sure your organisation doesn’t fall foul of its responsibilities.

Three senior leaders from Grant Thornton share their view on how NEDs can help the board manage changing supply chain regulations and risks.

1. Think in a global context

In a globally connected, fast moving world that has suffered from COVID-19, inflationary issues and supply chain disruption, the pressure on businesses to respond to client needs is ever present. Doing business responsibly is important, regardless of which stakeholder is looking at your organisation, be it your employees, investors, customers or clients. NEDs play a vital role in supporting businesses to be more transparent in their dealings across this subject area than ever before.

Modern slavery and human rights transgressions are issues that should not occur, but they do. Threats to geopolitical stability increases the risk of slavery. This is a topic that should be part of your ongoing board discussions, including helping executives navigate the intricacies of the legal requirements that touch your organisation.

Ask yourself how comfortable are you that your organisation is mitigating key risks in the supply chain. Does the organisation have a Modern Slavery Transparency Statement to show how they are responding to this challenge?

2. Map your supply chain deeper than before

We have seen supply chain priorities change over the last few years. Less than five years ago, supply chains were about minimising the cost associated with goods. Fast forward to 2022 following a pandemic and political uncertainty, supply chain specialists are prioritising risk and resilience over cost. This is because the cost of not supplying is greater than the additional costs to achieve consistent supply.

We are seeing businesses map their supply chains in more detail than ever before, many looking at the next two, three or more tiers down. This is a great exercise to do, not just for supply risk but also for other risks such as slavery or environmental damage – it is always better to know this before someone tells you.

3. Recognise that skills are key to a sustainable supply chain

Ethical sourcing is high on the agenda for buyers. How an organisation does business and treats their people can make the difference between winning and losing work, and the supply chain partners you do business with.

The past couple of years have seen a huge shift in expectations not only in terms of how people work but the skills that are required to undertake work in a different way. The spotlight has been firmly on how organisations can increase hybrid working, be more inclusive and move to more digital capabilities in order to be future fit.

These three key areas all centre around organisations undertaking a comprehensive strategic review of their workforce in terms of:

the skills needed now and in the future
the shape of your employee value proposition (your promise to your people) to attract and retain the best talent
how you mobilise your workforce to be truly agile and respond to customer and external demands e.g., the balance of permanent and contingent resource to meet the ebb and flow of demand

Having a robust strategic workforce planning approach and forward-thinking mindset to your human capital is vital for organisations to thrive and respond effectively in this volatile world. Getting this right will not only have a direct effect on your people but also through your supply chain.

Inspire your board to get ahead of further changes

Whatever lens you use to look at supply chains and how they operate, there are risks and challenges that need to be navigated. NEDs play a key part in holding the organisation to account to mitigate and manage these.

Supply chain challenges and issues will not stand still. As the complexities of the external environment change so will supply chain issues. Are you in a position to answer the question “how is my organisation responding to the changing landscape of the supply chain, are we mitigating against modern slavery and are we operating with a supply chain that has been resourced ethically?”, there is much to consider.

This blog is written by Jacky Griffiths, Lead for People, Culture and ESG, Business Risk Services at Grant Thornton UK; Oliver Bridge, Head of Operational Consulting at Grant Thornton UK; and Katie Nightingale, Associate Director, People Consulting Lead, Business Consulting at Grant Thornton UK.

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