Supply Chain Governance Is Essential to the Ethical Business

Institute supply chain governance fueled by data that only a modern platform can offer.

Key Takeaways: 

  • Talk isn’t enough. You have to implement a governance strategy to make sure that all company decisions align with your stated values 
  • In order to prove responsible governance, you must have real-time data and reporting 
  • Governance provides the transparency demanded by consumers 
  • Collaboration is key: it’s all about relationships, internally and externally, with all stakeholders 
  • The right technology is important to set expectations, track and audit suppliers, and maintain the sustainable supply chain that will soon become essential, not optional.

When it comes to supply chain sustainability, responsible organizations don’t just talk – they act by creating a governance structure. Proper governance ensures that company decisions align with stated company values and can provide the data and transparency that proves, which the world is increasingly demanding. 

Governance for the sustainable supply chain takes collaboration, formalization, and additional mechanisms. In a collaborative environment, companies can execute their sustainability strategy through consensus with supply chain stakeholders. This approach means far better collaboration on results than when rules are simply imposed.  

Governance of your supply chain is not the same as managing it. Although both management and governance have the goal of creating a more efficient supply chain, management deals with the products and their efficiency. Governance takes a more holistic view of the system and synergies between the players. 

Effective governance requires real-time data to improve sourcing decisions, create and nurture a strong supplier network, and provide the transparency consumers demand. This requires the right technology, so you can, indeed, walk your company talk. 

The Importance of a Good Strategy

A weak or non-existent supply chain governance strategy leads to poor transparency and weakens the foundation of your supply chain. Governance ensures you have the correct resources and capabilities there when you need them.  

Profits are important, and they will come with the reputational boost your company gets from proper governance (not to mention fewer unexpected disruptions due to better diligence). Transparency into your supply chain is a must-have for today’s consumers, which means companies must broaden their vision to create a better future through a governed, sustainable supply chain. 

Many companies say they believe in corporate social responsibility but believing and doing are two different things.  

It’s important to note the difference between supply chain management and supply chain governance:   

  • Supply chain management is concerned with the operational side of the supply chain and strategic coordination of partner actions. 
  • Supply chain governance integrates coordination of operations and ensures that the proper policies are implemented and controlled. It means taking intentional actions to affect partner relationships. 

Supply chain governance creates leverage and scale, helps manage risk, increases bottom-line profitability, and conforms to your regulatory, social, and environmentally friendly company agenda.

The Elements of Supply Chain Governance

Supply chain governance is multidimensional and includes initiating, developing, and maintaining relationships between each ‘link’ in your supply chain. It coordinates the way financial, material, and human resources are earmarked within the flow and the framework for decision-making. 

Mechanisms for governance can include contracts, standards, mechanisms for reporting, and social bonds. Key components include: 

  • Working collaboratively to plan, establish and communicate overall policy guidelines, minimum expectations of performance, assessed risk, mitigation plans, and compliance metrics 
  • Providing visibility into supply chain expenditures company-wide through functional categories and contract compliance 
  • Planning and executing essential initiatives while incorporating supply chain governance attributes 
  • Tracking, auditing, and reporting initiative status as well as key measures of governance across internal customer-facing departments and external suppliers, carriers, and intermediaries as well as key company stakeholders. 

It’s also imperative to establish continuous process improvements that are tied to closed-loop monitoring and control of spending and compliance behavior. Creation of a Chief Supply Chain Officer role can centralize functions to facilitate company-wide standardization of goals. 
An effective strategy relies on real-time supply chain management data, and this is where supply chain technology platforms shine. 

Technology to Govern Your Governance 

Supply chain transparency relies heavily on data that is not available via your ERP system or those spreadsheets you’ve been using. Sophisticated supply chain governance strategy, implementation, and auditing capabilities require state-of-the-art technology that harnesses the power of artificial intelligence to: 

  • Facilitate supplier compliance tasks so suppliers can self-manage corrective action plans and note improvements as they implement them.  
  • Manage corporate responsibility assessments as well as audits that relate to working conditions and environmental impacts. 
  • Satisfy stakeholders and create competitive advantages through transparency. 
  • Mitigate the risk of damage to your brand equity arising from false claims or the absence of accurate, credible reporting. 
  • Enhance collaboration with full automation of assessment information. 
  • Make tracking factory certifications easy through an onboarding process that lets users add their codes into the system and maintain them. 

In addition, the right supply chain management platform helps you create and nurture a robust supply network. Setting clear expectations means better communication and more enthusiastic collaboration because your approach is fair and open when it comes to scorecards and sourcing decisions – it’s all in the data

Supply chain governance is quickly gaining importance as a tool to execute on corporate responsibility and sustainability initiatives. In the near future, ethical enterprise management will not be optional – plan accordingly. 

Count on the Logility® Digital Supply Chain Platform

The Logility platform enables good governance and accelerates the sustainable digital supply chain by leveraging data-driven tools such as advanced analytics and AI that empower your business with greater visibility that means accurate planning, accelerated cycle times, improved precision, and increased operating performance.  

We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions