Supply chains have come under immense strain over the past few years. Most recently, a drought in Panama has led to low water levels in the Panama Canal that have forced new draft restrictions and reduced container traffic through the busy canal. At one point, more than 200 vessels were lined up at its entry points, according to The Wall Street Journal. This crisis provides another example of the challenges that supply chains are facing. And such supply chain disruptions are likely to increase as the climate continues to change. As Heiko Schwarz, global supply chain risk advisor at Sphera, said in an episode of the SpheraNOW podcast, “The new normal is having a supply chain crisis ongoing.”
In addition to the rise in supply chain disruptions, expectations are growing for companies to monitor their supply chains for environmental, social and governance (ESG) risks. Environmental aspects that are coming under greater scrutiny include greenhouse gas (GHG) emissions generated by supply chain operations. While social risks such as the use of forced labor and conflict minerals have been concerns for some time, there are now even greater expectations for companies to monitor their supply chains for these risks as the focus on ESG increases.
Existing and emerging supply chain regulations across the globe require companies to monitor their supply chain partners for illegal and unethical conduct. Examples of such regulations include Germany’s Supply Chain Law (LkSG), the Norwegian Transparency Act, the Swiss VSoTr legislation and the EU Corporate Sustainability Due Diligence Directive (CSDDD). Companies must also comply with general sustainability regulations that require them to report environmental and social information. For example, through the ESRS S2 standard, the Corporate Sustainability Reporting Directive (CSRD) requires companies to report information on workers in their value chains.
Companies must adopt comprehensive SCRM strategies to stay competitive and compliant in today’s rapidly changing business and regulatory environment. A comprehensive SCRM strategy includes identifying, assessing and mitigating all types of supply chain risk in both proactive and reactive ways. Holistic SCRM strategies also take ESG and sustainability factors and expectations into consideration.
For companies with expansive supply chains comprised of thousands of suppliers and third parties, achieving a total view of risk is only possible with the help of a digital solution. Sphera Supply Chain Risk Management helps customers solve business and ESG compliance challenges and uncover potential threats to their supply chains.
Sphera SCRM enables customers to identify and respond to risk through its cloud-based modular platform powered by artificial intelligence (AI), big data and machine learning. The solution monitors supply chains for commodity risk, third-party risk and compliance risk, among other types of risk. Companies need real-time insights to manage and mitigate risk in their supply chains. And as the global regulatory focus on ESG risks continues to grow, companies must gain greater visibility into the sub-tiers of their supply chains.
Companies that depend on raw materials to manufacture their products are vulnerable to commodity risk in the supply chain. With Sphera SCRM Commodity Risk Tracker, businesses can monitor commodity risk in real time, diversify their sourcing portfolio and secure supplies before prices increase.
To comply with growing regulatory requirements that demand greater supply chain transparency, companies will need better visibility into the sub-tiers of their supply network. Sphera SCRM Sub-Tier Visibility enables companies to achieve multi-tier transparency in their supply chains through greater collaboration.
Furthermore, Sphera SCRM Risk Assessment helps companies collaborate with business partners more efficiently by automating supplier and third-party risk assessments. Given that supplier and third-party risk assessments are usually conducted manually, automating the process helps businesses manage due diligence efforts more efficiently.
With Sphera SCRM Compliance Incident Management, companies can monitor their supply chains for compliance-related violations in real time and implement risk management controls. The solution helps companies navigate existing and emerging regulations, including Germany’s Supply Chain Law (LkSG).
A comprehensive approach to SCRM helps businesses achieve greater supply chain visibility, ensure regulatory compliance, meet ESG and sustainability goals and build resilience against future supply chain disruptions. After all, it’s not a matter of if supply chain disruptions will happen, but when.