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Why Sustainable Supply Chain Risk Management Cannot Be Siloed

April 2, 2019

Second paper available for download in our Sustainable Supply Risk Management and Supplier CSR Monitoring White Paper Series

Many organizations are beginning to make efforts in Sustainable Supply Risk Management and mitigation, but the fact remains that preventable risks are still materializing on a daily basis. In addition, many organizations are still losing millions, and in some Global 3000 cases, billions of dollars a year due to supply chain incidents that could have been caught or had their impact significantly reduced with proactive Sustainable Supply Risk Management and monitoring. So why are organizations still losing millions, or billions, due to these supply chain risks?

Lack of Resources. Most organizations do not have enough people with the right expertise, or money, to effectively manage and monitor supplier sustainability efforts.

Lack of Time. Most skilled resources in an organization barely have enough time to do their primary jobs, and since this is never anyone’s primary job (as Procurement needs to focus on cost cutting and cost control, HR with filling empty seats, Engineering with insuring product quality and safety, etc.), it typically becomes a side issue that is only addressed when an issue arises (and has to be dealt with right away) or when the C-Suite becomes aware of a new regulation that might impact the organization and hands the regulation over to the perceived subject matter expert to investigate.

Lack of Immediacy. Despite the fact that there may have been hundreds of smaller incidents (like tremors before an earthquake) in the supply chain that resulted in small fines, unexpected cost increases, disruptions, and minor brand damage, which may have collectively done considerable damage over time, if no single incident has been severe enough to get the C-Suite’s attention, something else will always be higher priority.

Lack of Cohesion. Most risk management and sustainability efforts grow organically over time as different functions encounter risks, regulations, or sustainability and social responsibility objectives that need to be addressed.

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