are you ready to do the right thing?
TRANSCRIPT
Are you ready to do the right thing?
Playing your part in supplier due diligence
Ted DattaDirector - GRC Solutions (UK & Ireland)
Bureau van Dijk
Overview
The key issues surrounding supply chain due diligence
Case studies: two contrasting approaches
Takeaways: the latest data & visualisation tools
Poll Question
What do you consider the main role of Procurement within the
supplier due diligence process?
https://cms.superevent.com/#/interactivity/voting/07d0406305a8b6338fba
5e553e8ce6f8
1. Establishing risk policy for the supplier due diligence process
2. Establishing working groups to create risk policy for the process
3. Feeding specific requirements into the overall policy and process
4. Managing suppliers against the risk policy established in the wider business
What are they key issues
facing supply chain due
diligence?
Key Issue (1) – Ethical Procurement
Modern Slavery, Human Trafficking & Forced Labour
.21 million people are victims of forced
labour – 11.4 million women and girls and
9.5 million men and boysNearly 50% of 533 corporate respondents
surveyed stated Human Rights was the
number one issue in the coming 12 months
https://www.theguardian.com/global-development/2016/jun/10/court-finds-uk-gangmaster-liable-for-modern-slavery-victims-kent-chicken-catching-eggs
Key Issue (2) – Corporate Transparency
Anti-Corruption Beneficial Ownership
https://www.theguardian.com/uk-news/2016/sep/12/prosecution-failure-prevent-fraud-by-staff-white-collar-crime
Key Issue (3) – Economic Uncertainty
http://www.bvdinfo.com/en-gb/blog/supplier-and-credit-risk-management/retailers-focusing-on-supply-chains-since-brexit-v
Case Studies
Contrasting approaches to due diligence
Case Study – 1
“Going it alone…”
Retailer – £1.5bn
Low-cost sourcing model(s)
Emerging market supply chain
Industry & Organisation
The business challengeBusiness challenge…
Renewal of banking agreements due imminently
New covenants imposed by primary banks
Vet all suppliers against Sanctions
Sanctions
Trade restrictions on dealing with certain entities & individuals
State owned entities (SOEs) and special designated nationals
(SDNs) focus of regimes
Punitive fines & reputational loss
http://www.wsj.com/articles/schlumberger-unit-expected-to-plead-guilty-to-violating-iran-sudan-sanctions-1427312135
Stand-off…
Project leadership
Solution (project 1) – Data Quality
Solution (step 3) – purposeful testing Solution (project 2) – Supplier Segmentation
Solution (project 3) – Risk Model
Output
ContentCapability
128 “red-flags” identified
Outcome
Role of Procurement
Running three separate projects at once!
Left alone to build a risk model for supplier screening
Balance “commercial” and “compliance” supplier relationships
Lessons learnt
Build connectivity to the sourcing process
Focus on what happens next – ongoing monitoring
Collaborative “working groups” are not easy to create
Case Study – 2
“Better together…”
Pharmaceuticals – £16bn GBP
Highly regulated sourcing
Globally integrated supply chain
Industry & Organisation
The business challengeBusiness challenge…
High profile bribery & corruption scandal(s) within industry
External auditors identified gaps in current process
Global supply chain of >15,000 entities
3rd Party Due Diligence Programmes
! HIGH VOLUMES ! MULTIPLE TIERS
Not just suppliers (all third parties)
Lots of Interested Parties
FINANCE TECHNOLOGY
COMPLIANCE, LEGAL & TRADE SANCTIONS
Not just procurement (diverse project group)
Live Process: Global Pharma ClientSolution (1) – design the end-to-end process
Due
Diligence
Live Process: Global Pharma ClientSolution (2) – streamline the end-to-end process
Due
Diligence
Outcome
Streamline due diligence process upfront – fail fast!!
Total coverage of 3rd parties, not only “perceived risk”
Less reliance on manual questionnaires
Role of Procurement
Designing the end-to-end business process
Engaging specific subject matter experts for input
Achieve automation where possible
Lessons learnt
Upfront due diligence saves time and cost
Industry standards are consistently rising
Senior sponsorship from the outset is critical
Takeaways
Latest data & visualisation tools
Unravelling the world of corporate data…
Compliance Catalyst – Example Risk Model
Supplier Risk Profile
Total / weighted score
Business Risk
Status / Age
Total revenue / employees
Sector Risk
Industry coding
Financial Risk
External ratings providerBeneficial Owners
Identifiy & risk assess
Directors
Identifiy & risk assess Group Risk
Risk assess corporate famiyNews
Screen for adverse media
Country Risk
Transparency International
32
…to help you make informed decisions
Introducing RepRisk
“
“Environmental, social and corporate governance business intelligence…”
Takeaways
Today’s supply chains are about more than just supply
Procurement’s role varies, but suppliers are a constant concern
Joined-up approach key for sustainable improvement
Poll Results
What do you consider the main role of Procurement within the
supplier due diligence process?
https://cms.superevent.com/#/interactivity/voting/07d0406305a8b6338fba
5e553e8ce6f8
1. Establishing risk policy for the supplier due diligence process
2. Establishing working groups to create risk policy for the process
3. Feeding specific requirements into the overall policy and process
4. Managing suppliers against the risk policy established in the wider business