SHELLY ANN MOHAMMED

In the past year we’ve witnessed everything from border closures to staffing shortages push supply chains to breaking point – patterns of demand have changed, container costs have increased and backlogs developed.

While the pandemic has created much of the disruption, ongoing environmental changes, economic volatility, political uncertainty and now the crisis in Ukraine means that, like coivd19, supply chain volatility is something societies needs to adapt to as its impact will be felt for the foreseeable future.

As we look ahead to increased inflation and ongoing disruption, we recently asked finance and supply chain professionals around the world* about the biggest challenges this volatility presented to the organisations they worked with, and how best to tackle them.

The networks of suppliers and customers are the lifeblood of any organisation and disruption to this flow has an adverse impact on financial health, intrinsically linking procurement and supply functions to the finance department. Ensuring liquidity in the supply chain during these turbulent times is a shared and critical challenge for both disciplines.

Hand in hand with uncertainty comes increased reliance on timely financial information and accurate and insightful non-financial reporting. These functions need to come together to address not just the profitability concerns, but also the challenge of demonstrating ethical standards throughout the supply chain, as well as achieving the organisations, and society’s, sustainability goals.

Risk of weak links

The ethical standing of any business is only as strong as the weakest link in its supply chain. With risks ranging from modern day slavery to climate change, organisations need to make informed decisions about who they trade with, while regulators and stakeholders need to be assured of the due diligence processes in place.

Supply chain and finance professionals have a shared duty in applying ethical standards, and meeting these obligations, and this starts with having a shared vision. It is only from this common viewpoint that information can be assessed for accuracy and relevance so that insightful business decisions can be made. Together finance and supply chain teams can create the ethical framework, procurement policies and supplier codes of conduct to both mitigate risk and add value.

Climate change governance

While financial fraud and human working conditions are key ethical concerns, around 80 per cent of an organisation’s sustainability impact sits in its supply chain making governance around climate change a top priority. Knowing who lies along the supply chain is a challenge, with that knowledge deteriorating from tier one to tier three where it can become more complicated. A great deal of trust is needed across these tiers, and this is where the greatest environment, social and governance (ESG) risks are present for organisations large and small.

In meeting environmental targets, there’s naturally an increasing demand for evidence of emission re