Supply chains and COVID-19: An opinion piece

Recently, I engaged in a robust debate over the perceived, or otherwise, lack of preparedness of our supermarkets and pharmacies to meet the demand of anxious customers, and their obligation and responsibility to provide basic necessities to our communities. Particularly to our most vulnerable. A proportion of the community feels that they are falling short in their social responsibility to ensure that we all have safe access to essentials.

Those of us who work in procurement know that we constantly assess our supply chains for risk. We look at macro risks, supply risks, demand risks, financial risks, transportation and logistics risks, manufacturing risks, sustainability risks, human rights risks and many more. We model scenarios, we calculate worst case, we assess impacts, and we take steps to mitigate those risks. But very rarely do we anticipate a scenario that considers all the risks at the same time.

Procurement teams are working through the responses and looking to minimise disruptions to supply chain in a scenario where the worst case worsens daily. And hopefully this time next year, we will be sharing the stories of how we made it through this state of emergency, the lessons we’ve learned and how, as a result, we build more resilient supply chains. One of the learnings is that many of our ‘best practice’ procurement models, where we seek to optimise and reduce cost – for example just-in-time manufacturing – can be at odds with planning for resilience and continuity in a world of emergency and uncertainty. How we strike that balance will be a key focus.

When shoppers walk into supermarkets and are confronted with empty shelves, it’s easy to see why it feels supermarkets are falling short of their obligations. But the reality is that these supermarkets have been taking some extraordinary measures to meet the unprecedented levels of demand – both on the supply and demand side. They have been restricting quantities for individual shoppers to ensure more people have access. They are broadening supply bases, increasing deliveries, and HR teams are busy recruiting casual staff to assist in stores. Alongside this, the individuals working in stores are dealing with frustrated and sometimes abusive customers, whilst also mindful of the fact that they are ‘frontline’ and, as workers in the community, have a heightened chance of contracting COVID-19.

The role of government in assisting with these specific challenges also needs to be acknowledged. Local government legislation placing curfews on truck deliveries restricted the ability for supermarkets to restock quickly as shelves were being stripped bare. While Queensland lifted these restrictions early last week, other states have been slower to follow, with several joining Queensland only in the last couple of days.

Supermarkets are doing the best they can under challenging circumstances. But, what about our social responsibility as individuals to each other, and to our own communities? Can we really place the burden on organisations who are made up of individuals, and generally hard-working, well-intentioned individuals, and abscond our role in this? Why are we hoarding hand sanitiser and soap, when it’s in our best interests to ensure everyone is kept safe? Why are we purchasing extra freezers to stock months’ worth of meat when we wouldn’t otherwise? Why are we forcing the elderly to line up at 7am to buy groceries? Several people have criticised the latter, but realistically, it is the only time when supermarkets can ensure that the shelves are as full as they are going to be that day. Remember, we as a community, with our panic-buying, have also forced our more vulnerable into this position.

While companies work to fulfil their responsibilities, preserve jobs within their business, preserve jobs for workers within their supply chain and generally work to keep the lights on, I hope we also remember that we have a responsibility to each other. Remember to be kind despite the uncertainty and worry. We’re all in this together.

This article was written by Sujata Karandikar, Senior Manager at Point Advisory with a focus on sustainable procurement and social impact.

Expanded service offerings – Human rights

Point Advisory is pleased to announce that we are expanding our service offerings in 2019 to include a new business line – human rights.

Time to get started on ‘Business and human rights’

With the enactment of Australia’s Modern Slavery Act in late 2018, companies with annual revenue over $100 million will need to make annual public reports (Modern Slavery Statements) on their actions to address modern slavery risks in their operations and supply chains. The below diagram summarises the requirements that commence in financials years commencing in 2019.

What is modern slavery?

Modern slavery relates to a range of significant human rights breaches typically on people in vulnerable situations and includes human trafficking, slavery, child labour, debt-bondage, forced labour and personal servitude. It can occur within an organisation’s operations and supply chain.

Point Advisory can support your organisation in meeting the requirements of the new Act and enhance your approach to respecting and advancing human rights. Our team has practical experience in implementing responsible sourcing practices, meeting the requirements of modern slavery legislation globally, developing human right policies, and benchmarking human rights performance.

For further information on our human rights services visit our website or contact Alan Dayeh

Climate change and human rights: Our integrated sustainability approach

The Human Rights Council has stressed that it is critical to apply a human rights-based approach to guide policies and measures designed to address climate change. To support this, our climate change and human rights specialists work together to incorporate a rights-based approach to ensure that climate change strategies, risk management, mitigation and adaptation programs do not detract from the corporate responsibility to respect human rights. This includes considering risks of creating unintended inequalities, vulnerabilities, or discriminatory practices as a result of our clients’ climate change responses. Climate risk and the recommendations of the G20’s Financial Stability Board’s Task Force on Climate-related Financial Disclosures (‘TCFD’) are increasingly becoming a topic for discussion for Boards and investors.

Showcase – Climate Risk

As ASIC said towards the end of 2018, “Climate change is a foreseeable risk facing many listed companies in the Australian market in a range of different industries. Directors and officers of listed companies need to understand and continually reassess existing and emerging risks (including climate risk) that may affect the company’s business.”[1]

Point Advisory has developed a suite of services that brings together our team’s capabilities in risk management, economic modelling, scenario analysis, carbon management, target setting, adaptation planning and corporate reporting to offer end-to-end support as organisations look to understand and manage their climate-related  risks and opportunities in line with the TCFD recommendations.

We are pleased to have supported several clients in their climate risk journeys recently, including the delivery of a climate-related physical risk assessment for a large multi-site industrial client, a TCFD disclosure gap analysis and initial climate risk assessment for Incitec Pivot Limited, and the development of Westernport Water’s Climate Change Adaptation Plan, amongst others.

For further information on our climate risk services visit our website or contact a member of our team – Christophe Brulliard and Marisa Sanchez Urrea

[1] Australian Securities and Investments Commission, September 2018, Report 593: Climate risk disclosure by Australia’s listed companies.