How Ethical Supply Chains Can Survive the Pandemic

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COVID-19 has disrupted supply chains across the globe. Businesses quickly realized that the pre-coronavirus paradigm was no longer relevant. Lockdown restrictions combined with Brexit have only added to the complexities of the situation.

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The spiraling costs of shipping from Southeast Asia is causing a shortage of consumer goods in Europe, for importers of everything from children’s toys to home furnishings. Needless to say, there has never been a more challenging time to be in supply-chain management.

Much attention has been drawn to how supply chains are being affected, but one notable topic seems to have been completely overlooked. Ethical supply chains require much more vigilance from brands to set up and oversee. As a result of the uncertainty sweeping across Europe, Asia and Africa, many ethical supply chains have faced severe disruption, and businesses are having to quickly react to ensure they protect the livelihoods and futures of the communities they strive to support while ensuring the continuity of their business.

At Fenton & Co., we’re on a mission to bring transparency and accountability to the jewelry industry, a sector that was once synonymous with opaque supply chains, full of middlemen adding no value to the product and inflating prices. It’s estimated, for example, that a blue sapphire changes hands 10-15 times before being showcased in a jeweler’s storefront in the U.K. Our business model, therefore, centers around diligently overseeing our supply chain and sourcing exclusively from world leaders in ethical mining locations such as Sri Lanka, and overseeing the entire production process through select workshops, thus cutting middlemen out of the process.

Here’s how brands and organizations can address the unique challenges of today’s ethical supply chains.

Optimize for risk. Ethical brands must carefully select their risk framework and standards. Both will shape their strategic direction, and ultimately empower them to make better decisions, should they have to pivot their supply-chain operations. Adopting a risk-based approach enables brands to optimize for risk, by embracing a process of continuous evaluation and calibration across both the physical and digital components of the business model. Implementing systems such as blockchain and cyber-physical risk standards will lay the foundation for businesses to enter new markets, while simultaneously building trust in existing ones. This approach enables businesses to navigate supply-chain challenges regardless of whether borders open or close, or how international relations evolve.

Diversify and be nimble. Reducing dependencies on medium or high-risk sources (such as a single supplier), and adding new sources with different vulnerabilities, are critical to spreading the risk posed by localized lockdown restrictions. Businesses should identify suitable sources located in lower-risk countries, and assess the infrastructure in those regions and the logistical costs of having to switch production. Of course, building new supplier infrastructure takes time and capital, but it’s key to building adaptability and the continuity of the business.

In my own experience, prior to the first wave of lockdowns in 2020, the Fenton continuity plan included four scenarios (A, B, C and D) that enabled us to switch production should our primary workshops be shut down. Later that same month we found ourselves in the position of having to switch production from one country to another within 48 hours, as India plunged into a four-month lockdown. Our ability to seamlessly transition to our “scenario A” plan was critical to our success and ensuring supply-continuity. 

Explore new technologies. In the midst of the crisis, implementing new technologies might not always be viable. However, it will play an important role in the long term, as businesses position themselves to weather future disruptions. For some, this will require a mindset shift. Too many business leaders have avoided taking advantage of new technologies due to lack of knowledge or feeling overwhelmed. Both are understandable, but mindsets that embrace technologies are important to ensuring that the business remains competitive.

Empty supermarket shelves and disgruntled customers awaiting parcels held up in customs have become the hallmarks of the coronavirus pandemic. While lockdown restrictions and factory shutdowns bear most of the blame, the pandemic has cast a spotlight on the widespread challenges that plague global supply chains. Too often ethical brands don’t have a firm grasp of how much they need to be ordering, creating, shipping and selling. Yet they’ve failed to embrace technologies that can inform these decisions. The vast majority of businesses don’t lack data, but are unsure how to use it to drive their supply chains forward. Developing the necessary capabilities will play a key role for their long-term success.

Leverage data. Leadership teams should use data to stay ahead of supply-chain disruptions, by analyzing both internal and external sources. Harnessing artificial intelligence and machine learning for predictive and prescriptive analytics is the foundation of this process. Both tools can deploy early warning signs, model risk scenarios, and develop pre-programmed responses.

Change has been the only constant since the pandemic has swept across the globe. Continued volatility is inevitable, and ethical brands must be ready to adapt.

Jerome Brustlein is chief operating officer of Fenton & Co.

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