How to Strengthen Supply Chain Resilience while Meeting Compliance and Sustainability Demands
- A resilient supply chain can withstand and recover from unexpected challenges while maintaining operational continuity, so your business can minimize losses and boost productivity.
- Visibility of upstream suppliers to the source level is critical to strengthening supply chain resilience and securing your supply while ensuring adherence to sustainability standards, ESG requirements, and international regulations.
- Choose a reliable traceability solution that can provide your brand with real-time, unaggregated data from the farm/landfill level, so you can keep your supply chain agile, sustainable, and compliant.
The COVID-19 pandemic was a major wake-up call to the fragility of global supply chains, making supply chain resilience more important than ever. From product shortages to crippling bottlenecks to operational disarray, the pandemic put into question conventional practices for supply chain resilience. Now with a worldwide recession looming on the horizon and international sustainability regulations on the rise, your brand faces unprecedented threats to growth.
Long-term lessons from the pandemic suggest that deeper knowledge of your upstream suppliers, past tier-one and tier-two, is essential to mitigate risks and threats to your supply chain. This level of visibility and traceability is a win-win for your brand, enabling you to meet sustainability and compliance demands while boosting supply chain resilience. Continue reading to learn how to secure your supply sustainably.
The Resilient Supply Chain
In today's rapidly evolving business landscape, where disruptions are becoming more frequent and unpredictable, supply chain resilience has emerged as a critical determinant of an organization's long-term success. A resilient supply chain can withstand and recover from unexpected challenges while maintaining operational continuity, so your business can minimize losses and boost productivity. The four crucial features of resilient supply chains include:
- Agility: Adapting swiftly to disruptions and changes in demand or supply through supplier diversification and real-time data.
- End-to-end visibility: Complete visibility of upstream suppliers to raw material sourcing to secure supply and reduce uncertainty.
- Risk management: Supply chain mapping and continual risk assessments to identify bottlenecks and fortify against potential threats dependent on geographical or industry challenges.
- Innovation: Gathering verifiable, real-time data with cutting-edge technological solutions, like blockchain, for strategic decisions.
Studies show that over the course of a decade, companies can expect supply-chain-disruption losses equal to about 45 percent of one year’s profit on average. Additionally, your supply chain faces non-compliance risks if you are unprepared for audits aligned with rising sustainability regulations. While investing in supply chain resilience will require time and resources, the result is the long-term protection of your supply and, ultimately, your business.
Supply Chain Resilience & Ethical Sourcing
So, how can investing in supply chain resilience solutions help your brand meet rising sustainability demands simultaneously? The answer lies in enhanced supply chain visibility to the source level. By establishing robust systems and technologies for risk mitigation upstream, companies can comprehensively understand their suppliers, materials or ingredients, and production processes to the farm/landfill where they originate.
With this heightened visibility, your brand can effectively monitor and assess its social and environmental impact throughout your entire supply chain, ensuring adherence to industry standards, ESG requirements, and international regulations. Real-time data and insights into the origin and lifecycle of your products enable your company to make data-driven decisions for implementing sustainable practices and swiftly addressing any non-compliance issues (e.g., EUDR compliance) that may arise.
Using Supply Chain Resilience To Secure Your Supply Sustainably
The four criteria below are imperative for enhancing supply chain resilience and meeting sourcing compliance requirements:
- Source-level visibility: Many brands know the tier-one and tier-two suppliers producing their final or semi-final products. However, most brands lack complete visibility of their upstream suppliers to the source. Tracking and tracing your materials and ingredients at the farms or landfills where they originate is essential for securing your supply and adhering to global sustainability regulations. For example, by monitoring regenerative farming practices, you can mitigate risks to your supply and boost farm productivity while sequestering carbon to back up decarbonization claims. With reliable data on raw material sourcing, your brand can be equipped with the granularity needed to transform its supply from “just in time” to “just in case.”
- Continual risk assessments: To prepare for unforeseen circumstances (e.g., natural disasters, geopolitical conflicts) and compliance requirements (e.g., labor standards, deforestation), map your entire supply chain, from sourcing to manufacturing to distribution, to identify high-risk areas. Using tools like a risk matrix, assess the likelihood and consequences of potential threats and prioritize them based on their level of impact. Develop mitigation strategies based on prioritized areas, such as supplier diversification or increased inventory levels. Lastly, continually monitor your intervention strategies to determine their effectiveness and any additional threats.
- Real-time tracking: Spot audits will no longer be sufficient for avoiding costly disruptions and non-compliance risks. Your brand can access up-to-date product information and reports at your fingertips by leveraging traceability solutions that track and trace your materials and ingredients as they move throughout your supply chain. Real-time data will allow your brand to stay informed of potential bottlenecks so you can respond promptly. Additionally, your brand can access current social and environmental data so you can remain prepared for compliance audits.
- Data integrity: Strategic forecasting, informed risk mitigation, and verifiable sustainability claims all hinge on reliable data. Capturing both primary and secondary data will keep your reports accurate and auditable. Primary data includes source-level data that your company collects. On the other hand, secondary data is gathered by a partner or aggregator. Tracking both is necessary to reduce inconsistencies and verify data integrity.
Real-World Resilient & Sustainable Supply Chain Example
Now that you’ve learned best practices for resilient and sustainable supply chains, you may wonder what this looks like in the real world. A leading example of strategic sourcing is Coca-Cola Africa. Coca-Cola Africa partnered with BanQu, an advanced traceability software, to drive a circular economy, optimize their recycling value chain, ensure EPR compliance, and support informal waste collectors.
By leveraging BanQu’s blockchain-based platform, Coca-Cola Africa tracks and traces recycled materials down to the landfill they originated and provides digital identities to waste collectors in the value chain. This level of visibility enables Coca-Cola Africa to reduce risks while sourcing sustainably with comprehensive information on their supply and economic identities for waste collectors.
How To Identify the Right Traceability Partner to Strengthen Supply Chain Resilience & Sustainability
Whether you’re a fashion brand aiming to secure your cotton supply while adhering to the UFLPA or a beauty and wellness brand wanting to ensure your palm oil is risk-free and deforestation-free, finding the right traceability partner will be key to success.
Selecting the right solution can feel overwhelming with the plethora of traceability software available. The criteria below will guide you in finding the best traceability solution to meet your strategic sourcing needs:
Global Expertise and Ongoing Guidance
Selecting a traceability partner with worldwide expertise is pivotal in enhancing supply chain resilience and sustainability. In today's globalized economy, supply chains span across borders, involving numerous stakeholders and complex processes. A traceability partner with experienced global support teams understands the intricacies and challenges of navigating international supply chains. Select a partner that can speak the local language and can navigate the cultural barriers and challenges that put your ingredients and materials at risk. Additionally, ensure they can provide in-field implementation and continued user and product support.
Proof of Provenance
Proof of provenance is not just about knowing where a product or material originated; it's about having indisputable evidence to back it up. Select a traceability solution that goes beyond basic shipping data. Your traceability partner or software should provide verifiable geo-location data, ensuring you have the proof you need down to the exact polygon of land where your materials or ingredients originate. Additionally, they should be able to gather primary data on the social and environmental impacts at the source. With concrete, geo-located data down to the farm/landfill level, your brand can better understand where your supply originates to mitigate compliance and disruption risks.
Traceability and ESG Reporting
The best traceability solutions should be able to produce verifiable reports of data from throughout your entire supply chain – including your product chain of custody and ESG measures. These reports should be easily accessible and provide a comprehensive overview of your supply chain and compliance status. Integrating ESG metrics tied to your procurement data lets you stay up-to-date and informed on any disruptions or compliance issues. This is critical for prompt corrective actions to avoid costly setbacks to production or fines for non-compliance. Additionally, selecting a blockchain-based traceability solution ensures data security and integrity for accurate reports.
Select a traceability solution that seamlessly integrates with your existing systems. That includes any ERP, inventory management, and other legacy systems utilized for supply chain management, procurement, compliance, and sustainability data. System compatibility will contribute to streamlined operations, minimizing the likelihood of data errors or inconsistency. Additionally, it will enhance efficiency by ensuring your suppliers do not need to submit double or even triple data entry. Consistent, easily accessible data will be crucial for identifying and monitoring supply chain risks.
Agility is a crucial element in building a resilient and compliant supply chain. Your traceability solution must be flexible and nimble to capture changing datasets to respond to evolving regulatory requirements (e.g., EPR, EU due diligence, SEC climate reporting, etc.) and unexpected supply roadblocks. If not, your company will have to redo calculations or projections constantly. Seek a traceability platform that combines flexibility and scalability, providing a metadata layer that enables effortless integration of new parameters and keeps pace with evolving compliance and supply chain demands.
Supply Chain Resilience & Sustainability Conclusion
In today's rapidly evolving business landscape, investing in supply chain resilience is essential. The COVID-19 pandemic has highlighted the vulnerability of global supply chains, emphasizing the need for companies to shift from conventional to more strategic supply chain management. Through source-level visibility and verifiable, real-time data, enterprises can effectively mitigate risks and threats while adhering to sustainability and compliance standards. Selecting a reliable, globally experienced traceability partner to provide complete visibility of upstream operations will equip your brand with the granular data needed to secure your supply sustainably.
BanQu is an advanced traceability and compliance software that provides your brand with auditable procurement, compliance, and sustainability data throughout your entire supply chain. Our blockchain-based platform captures verifiable data from the source and is your one-stop shop for all your traceability and ESG reporting needs, allowing you to make data-driven decisions for securing your supply and meeting sourcing compliance demands. Schedule a call to kickstart your resilient and sustainable supply chain journey today!