Outsourcing, CSR and Supplier Management — Curious Intersections (Part 5)

Click here for Part 1, Part 2, Part 3, and Part 4 of this series.

In concluding his analysis in the Huffington Post, AMD's Tom Mohin suggests that as "social and environmental issues are increasingly integrated into business-to-business relationships, the hopeful vision of the future is that customers from more developed economies will help to improve labor and environmental conditions throughout the global supply chain. This vision is becoming reality as more companies with outsourced production models grapple with these issues and fold them into their business processes." Yet another side of the entire CSR element that Mohin does not touch on -- perhaps he will in his upcoming book -- are legislated requirements rather than those which simply run in violation of accepted industry norms, company specific supplier codes of conduct and the like.

For example, if we consider the area of supply chain traceability -- which is often required on a multi-tier basis -- and its specific applications to areas like the voidance of "conflict" items such as conflict minerals (e.g., tantalum, tin, tungsten, gold) and other certification that attest to products not containing restricted or hazardous substances, the ability to consider CSR and related compliance across an outsourced manufacturing environment becomes even more complicated. Another related challenge we've observed before is the double whammy that procurement and supply must manage within their supply chain and global sources that make up individual supply chains in the proliferation of ingredients, substances, parts, components and regulations (regional, country, etc.).

Ultimately, its our view that supplier networks and shared services that span industries will take over much of the initial onboarding and ongoing supplier validations in a global manufacturing environment by leveraging a many-to-many technology model which enables suppliers to register once and maintain basic profile information (and even submit to common audits across customers) that is shared in a controlled manner. These approaches will operate as a central repository that simplifies third party integrations and augmentations for a range of data which might include OSHA, DOT, EPA checks, code of conduct agreements and compliance, NDAs, ILA, chain of custody and related CSR practices, metrics and certification.

With much of basic vendor information gathering and management automated -- and effectively outsourced to an intermediary -- companies will be able to structure supplier auditing, development and management efforts around two-way dialogues where time is not spent measuring and gathering information, but engaging in a continuous two-way development process. At least this is one vision, but it's one that supplier management providers such as Achilles, Aravo and others, which leveraged a shared information gathering and distribution model, hope catches on more quickly. And we believe it will.

- Jason Busch

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