Why supplier risk management must involve cross-border travel

Date Posted: 31/10/2018 Category:
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Why supplier risk management must involve cross-border travel

Date Posted: 31/10/2018 Category:

US-based procurement expert, Kelly Barner, has warned professionals engaged in supplier relationship management that they must not get so immersed in the logical functions of their work that they neglect on-the-ground assessments of the farthest reaches of the supply chain. Barner was responding to a report in the Wall Street Journal which described the plight of freelance Congolese miners (‘cresseurs’) who mine cobalt, a metal needed for lithium-ion batteries. The underground working conditions of the miners, a significant proportion of whom are children, are perilous: they have access to no safety equipment and risk their lives daily.

Given that 67% of the world’s cobalt comes from the Congo, this has big implications for ethical supplier relationship management. Companies with global raw material supply chains, Barner notes, often have no data to verify the source of the metals they and their suppliers buy. In the absence of the data, it is easy to concentrate efforts on logical functions, such as spend analytics, cost reduction, and sourcing savings. But most procurement pros would be disturbed to find that the extraction of the materials they rely on puts unprotected miners’ lives in danger. It is not only an issue facing small or middling companies. The WSJ article names Fortune 500 heavyweights, such as Apple, Samsung, and VW.

Supply chain audits too often take place in “safe, comfortable conferences rooms,” Barner observes, where procurement pros make phone calls, review data, and conduct research. But one vital step is usually missing: when PricewaterhouseCoopers was appointed to audit the supply chain of a Belgian chemical company, they didn’t even set foot in the Congo.

As Barner says: “If companies want to assure the exclusion of material from non-compliant mines, someone has to take on the dirty and dangerous task of monitoring where the work takes place.” It means travelling to the furthest points of the supply chain and seeing the conditions with human eyes.

Nick Ford

Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.

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