Friday Guest Rant: A Brave New Supply Chain World

This morning I’d like to welcome Tim Albinson from Aravo and the 2sustain blog to Spend Matters. Tim is CEO and founder of Aravo and one of the bigger picture thinkers I’ve had the chance to know when it comes to not only sustainability, but the broader challenges of managing and acting on distributed supplier information in the global supply chain. Tim is a person who cares passionately about the cultural and societal implications of what are suppliers are doing – their environmental practices, their labor practices and much more. Please join me in welcoming Tim to Spend Matters.

Here’s my rant for this Friday:

I recently came across David Rankin quote in Business Week:

"We're on the verge of seeing a completely new set of information available to people who manage supply chains. It's not just cost and delivery time, the classic things. Now, a company can determine whether a supplier might be making products in a way that could cause risks to its reputation or even the environment. There is an explosion of data -- largely unmanaged and untapped -- that will enable people to identify suppliers' environmental liabilities, the social benefits they're creating, and reputational risks. Flying blind is no longer acceptable."

I couldn’t agree more.

Businesses today are functioning in an increasingly complex and volatile environment, and the list of potential supply chain risks grows longer and longer every week. Organizations are facing the credit crisis, a recession, complicated global sourcing networks, new compliance requirements (RoHS, REACH, C-TPAT), looming government regulations, fluctuating energy costs, climate change, resource depletion… oh, and let’s not forget the latest: piracy.… Without a doubt, this brave new world has become increasingly less forgiving and faster moving than ever before.

So -- and here’s where I start ranting -- why are so many organizations continuing to cling to the same supply chain management practices that they have been using for the past decade? Why do they think these outmoded methods can work in today’s complicated business environment? Are these companies still using carbon paper and typewriters, too? In just the last few weeks, I’ve sat with several Fortune 1000 procurement and supply chain executives who pointed to file cabinets where they are storing supplier information, or spoke of IT systems that each contained different pieces of supplier financial data, certifications, inspections, etc.

Given the pressures I just listed and the variety of supplier information and performance management solutions on the market today, I find it hard to understand what’s holding organizations back?? Poorly managed supplier information puts companies at increased risk -- and risk becomes even more dire in the current economic crisis. Of course, today’s economic storm clouds are bound to pass, but issues related to climate change, sustainability, supplier compliance, and Corporate Social Responsibility (CSR) information are here to stay. Jason, you’re absolutely right -- the fight is far from over, and it is time to stop sitting on the fence. By delaying action and continuing to rely on inefficient approaches to supplier information management, companies are missing out on cost savings. They’re putting themselves at risk for regulatory noncompliance. And, they’re forfeiting the chance to capitalize on valuable new business opportunities. Why would anyone position their company to be so vulnerable? It’s time for businesses of all sizes to engage, become educated, and acquire the supply chain management information solutions needed to compete and succeed in the today’s increasingly complex and risky global marketplace.

David Rankin said it well: Flying blind is no longer acceptable.

Spend Matters would like to thank Tim Albinson from Aravo for sharing his thoughts.

Readers may submit guest rants for consideration to: jbusch (at) spendmatters (dot) com

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