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What are Responsible Supply Chain Standards?

Responsible Supply Chain Standards

A sustainable supply chain is one in which ethical and ecologically responsible practices are completely integrated into a competitive and profitable model. End-to-end supply chain openness is essential; sustainability measures must encompass everything from raw material procurement to last-mile transportation, as well as product returns and recycling.

The growth of supply chain transparency and sustainability is being aided by digital transformation and the increasing sophistication of digital supply chain technology. Modern supply chains now offer unparalleled visibility and accountability thanks to big data management, advanced analytics, artificial intelligence (AI), and security solutions like blockchain and RFID sensors. Companies now have a far greater capacity – and obligation – to show corporate social responsibility and share best practices for sustainable logistics and green supply chains. Compliance goals and sustainability criteria are becoming increasingly standardized as ethical supply chain activities become a bigger and more immediate focus for firms. Ten criteria for assessing supply chain sustainability have been established by the United Nations Global Compact. Environmental responsibilities, labor practices, human rights, and corruption are among the topics covered. These values are based on the understanding that socially responsible actions and goods are beneficial not just to people and the environment, but also to brand awareness, competitiveness, and long-term profitability.

Supply chain sustainability in a changing world

The advent of COVID-19 provided a severe shock of recognition for many organizations about how outmoded and fragile their supply chain processes were. Even before the epidemic, however, certain fundamental shifts in consumer behavior were prompting global supply chain managers to rethink their strategies. The massive increase in demand for next-day shipment is one such development. The Amazon Effect is what it’s called, and it’s created a bit of a conundrum in terms of supply chain sustainability. When it comes to picking a retail channel, delivery speed came out on top of all other considerations in a 2019 poll of over 1,500 U.S. customers. Customers have expressed a desire to pay more for items that assure green logistical practices and transparent supply chains in numerous other reports, like this one from the MIT Sloan School of Management. Companies will need real-time access to third-party logistics networks and extensive, end-to-end insight over their whole supply chain operation, even the most remote, low-tier suppliers, if they are to deliver on both speed and sustainability in a significant way.

Three components of sustainable supply chains

Twenty years ago, the term “sustainability” was nearly entirely associated with “environmental friendliness.” It is now a much more comprehensive word. A contemporary sustainable supply chain includes green, transparent, and circular supply networks.

 

  • Green Supply Chain

The effective integration of environmentally responsible ideas and standards into supply chain management results in a green supply chain. Product design, materials procurement, production, logistics, and product end-of-life management are all included.

 

  • Transparent Supply Chain

The capacity and desire of a company to freely reveal information regarding the origins of commodities and labor, as well as end-to-end supply chain processes, is referred to as supply chain transparency. Many companies devote a great amount of effort and money to creating and maintaining ethical and environmentally conscious standards.

 

  • Circular Supply Chain

Items are dismantled or reduced to their basic materials form in a circular supply chain, and then remanufactured into sellable products, allowing businesses to reap the environmental advantages of recycling while recouping expenditures.

Supply Chain Frauds

Items are dismantled or reduced to their basic materials form in a circular supply chain, and then remanufactured into sellable products, allowing businesses to reap the environmental advantages of recycling while also recouping expenditures. Considering the tremendous sophistication and breadth of today’s supply chains, it’s no wonder that fraud is posing a greater danger to businesses than ever before. The systems, which frequently include an extensive network of third parties across the globe, including agents, intermediaries, resellers, distributors, and partners, are particularly vulnerable to misconduct in communities where white-collar law enforcement is less strict or where misconduct is not closely monitored.

Why Does Supply Chain Fraud Happen?

Do you know what the “fraud triangle” is? Motive, opportunity, and rationalization are the three aspects of the framework.

Motive: A person’s motivation for defrauding others, can range from financial gain to increased power and influence.

How an individual commits fraud—this can happen when an organization’s internal controls are insufficient or weak, or when the organization’s risk monitoring and evaluation are lax.

Rationalization: A person who commits fraud explains his or her actions so that they are consistent with their principles.

Common Types of Supply Chain Fraud

Bribery, money laundering, intellectual property (IP) theft, and other forms of supply chain crime harm retailers and consumer goods firms of all sizes. Bribes during supplier selection, counterfeit checks during financing, and fraudulent payments or payment guarantees are all examples of supply chain fraud.

Here are a few examples of frequent phrases:

 

  • Fraud in the Financial Sector
  • Goods or service misrepresentation
  • Bribery, including breaches of the Foreign Corrupt Practices Act (FCPA) and kickbacks
  • Violations of sanctions

Best Practices for Supply Chain Mitigation

Apart from diversifying your supplier chain, here are five suggested practices for businesses to reduce the risk of supply chain fraud:

 

  • Agents, distributors, business partners, and employees should all be subjected to risk-based due diligence.
  • Examine your organization’s structure and approval chain.
  • Enhance fraud and corruption controls, including accounting controls, training, policies, and procedures, based on risk assessments.
  • Independent and impartial sources acquainted with your sector, local culture, business practices, and applicable rules where you are operating should test transactions and controls in a timely way.
  • Regularly conduct, re-evaluate, and refresh your Fraud and Corruption Risk Assessment, and consider remedies as needed.

ISO 9001 Quality Management System

WHAT IS A QMS?

A quality management system (QMS) is a collection of policies, processes, and procedures that are necessary for planning and execution (production/development/service) in an organization’s main business area (i.e., areas that potentially affect the organization’s ability to satisfy customer needs). A Quality Management System, such as ISO 9001, is one example. Some people are referring to a QMS as a series of documents, but it refers to the complete system – the documents just describe it.

A quality management system (QMS) combines the organization’s numerous internal processes and aims to give a systematic approach to project execution. A process-based quality management system (QMS) helps businesses to identify, monitor, control, and improve their essential business processes, resulting in enhanced company performance. All ISO 9001 standards, including the ISO 9001 documentation requirements, must be addressed by a full ISO 9001 Quality Management System. Applying ISO 9001 to an example is a wonderful method to learn how it works.

ISO QMS

ISO 14001 is a global standard that lays out the requirements for a successful environmental management system (EMS). Rather than imposing environmental performance standards, it gives a framework that a business might follow.

ISO 14001 is a voluntary standard that enterprises can attest to as part of the ISO 14000 family of environmental management standards. Integrating it with other management system standards, most notably ISO 9001, can help organizations achieve their objectives even more effectively.

The policies, methods, strategies, practices, and records that establish the rules controlling how your firm interacts with the environment are referred to as an environmental management system, or EMS. Because only your firm will have the exact legal requirements and environmental interactions that match your business procedures, this system must be customized to your organization. The ISO 14001 criteria, on the other hand, give structure and guidance for developing your environmental management system, ensuring that you don’t overlook critical parts that make an EMS successful.

OHSAS 18001

Occupational Health and Safety Management Systems – Requirements (officially BS OHSAS 18001, but commonly referred to as ISO 18001) is a British Standard for occupational health and safety management systems that are recognized and used globally. The most recent version of this standard, known as “OHSAS 18001:2007,” was issued in 2007. An OH&SMS, or occupational health and safety management system, is made up of policies, processes, plans, practices, and records that establish the rules controlling how your firm handles occupational health and safety. Because only your firm has the exact legal requirements and occupational health and safety threats that match your business procedures, this system must be customized to your organization. The OHSAS 18001 regulations, on the other hand, give a framework and guidance for developing your occupational health and safety management system, ensuring that you do not overlook critical aspects required for a successful OH&SMS.

BCMS- Business Continuity Management Certification- ISO 22301

The ISO 22301 standard is a global framework designed to assist enterprises in identifying possible risks to core business processes and developing a business continuity management strategy. The ISO 22301 standard aids businesses in the development of appropriate backup systems and processes to protect against theft, natural disasters, disease outbreaks, terrorist attacks, and other unusual events. The ISO 22301 standard provides the standards for a company’s business continuity management system, including how to develop, implement, monitor, review, and enhance it to reduce the effect of interruptions.

The ISO 22301 BCMS certification establishes official business continuity requirements to keep your company running during and after an interruption. It aims to reduce the effect on important business functions while guaranteeing that they can still be supplied or restored quickly. The ISO 22301 business continuity management standard applies to businesses of all sizes in any industry, especially those that operate in high-risk or complicated situations where the capacity to perform without interruption is critical. If a severe problem occurs, ISO 22301 business continuity management certification will assist you to prevent losing money and consumers.

SA 8000

The SA8000 (Social Accountability) Standard is a prominent global social certification program that was founded in 1989 by Social Accountability International with the help of a board of advisors that included labor unions, NGOs, civil society groups, and businesses. The guideline promotes businesses of all sizes, industries, and countries to create, maintain, and implement socially responsible and acceptable working practices. The program provides a comprehensive framework for businesses to show their commitment to fair treatment and management practices for their employees and workers. The standard’s requirements were derived from numerous industry and corporate norms to make it relevant and helpful. In contrast to the checklist-style auditing of many other international standards, SA8000 uses a management system-inspired methodology to monitor social performance and continuous development.

IKEA IWAY

IWAY refers to IKEA’s approach to sourcing goods, services, materials, and components in a responsible manner. It establishes explicit expectations and methods of operation for environmental, social, and working conditions, as well as animal welfare, and it is required of all IKEA suppliers and service providers. IKEA’s mission is to constantly have a beneficial influence on people, society, and the environment by balancing economic expansion with environmental conservation and regeneration, as well as providing quality and fulfilling employment. Their suppliers and value chain play a critical role in accomplishing this goal.

IWAY is a system for total sustainability management. It contains the IWAY Standard – IKEA’s supplier code of conduct – as well as standard working, practices for all IKEA organizations, as well as our suppliers and service partners. The IWAY Standard is based on ten IWAY Principles, which represent our goals and lay forth our expectations for our partners. IWAY requirements support each of the ten principles in turn.

The IWAY criteria are divided into four categories: Must, Basic, Advanced, and Excellent. IWAY Must and IWAY Basic are the bare minimums that all suppliers and service providers that do business with IKEA must meet. Our goal, together with our business partners, is to constantly improve and go above the bare minimum to achieve IWAY.

 

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