A focus on your suppliers' compliance with legislation and best practice goes a long way to minimising supply chain risk
Nobody in business wants to take risks where they don't have to (or where they're not properly rewarded for those risks). And across a complex supply chain, there's plenty of scope for exposure to risk from suppliers. You need to do what you can to minimise risks such as liability from serious harm or having non-compliant subcontractors on site. And one good way of minimising these risks is having the data to prove that your suppliers are compliant with all relevant regulations. With the Canopy supplier management platform, you can take a proactive stance in having all that supplier data at your fingertips. In this blog, the latest in our occasional blog series on the platform's features, we focus on risk and compliance.
Keep risk under control, without worry or manual effort
Traditionally, Procurement has been good at checking that suppliers are compliant at onboarding. But with time-consuming manual processes and multiple digital storage systems, ongoing risk management has been more problematic. This encompasses both the detail (has supplier X reviewed their data security policy recently?), and the bigger picture (what's our concentration risk?).
Canopy facilitates proactive risk management, enabling you to assess, validate, and manage suppliers throughout your engagement with them. The smart platform uses risk as the primary means to assess the urgency and impact of supplier activities. Here are five ways that Canopy works to minimise the risks across your supply chain and to promote best practice in supplier management.
1. Assessing risk dynamically and comprehensively
You need to ensure your suppliers comply with a whole host of regulations. This extends to financial propriety, covered by Anti Bribery & Corruption (ABC) legislation. It covers data security and privacy, which you need your suppliers to take as seriously as you do. And they must have robust labour practices, from Modern Slavery to health and safety. But more broadly, you need assurance that your suppliers remain going concerns, that they're doing the right things in the right way. Canopy allows you to keep documentation on all these matters in one place.
2. Providing constant vigilance
It's all well and good getting the snapshot of compliance when you onboard a new supplier. But you need to ensure ongoing compliance to minimise your risks. With manual processes, it's all too easy to overlook expiry of certain certificates and permits. Canopy monitors risks continuously and automatically sends alerts to relevant users, providing an ongoing risk assessment across your supply chain. If you know that a supplier's public indemnity insurance is up for renewal, you can prompt them to keep you in the know that they've updated it.
3. Blocking non-compliant suppliers
There are clear financial and non-financial risks to dealing with non-compliant suppliers. Company directors are individually liable for breaches of compliance with regulations, as they have a duty to exercise reasonable diligence. And reputational risk can have a devastating effect on a company. As Canopy can immediately notify you of supplier incidents or non-compliant activity, automatically triggering remedial actions and alerting other business systems. For instance, through the platform's integration with your ERP, you can enable business rules to suspend new POs in the event of compliance breaches. As soon as the supplier lets you know they've become compliant, you can start doing business with them again.
4. Responding to local conditions
For global businesses, it's vital to remember that risks and compliance depend on local legislation and practice, from payment terms and currencies to tax, licensing, and health and safety arrangements. And a more complex supply chain can increase the risks of getting things wrong. Canopy's risk architecture distinguishes between local market dynamics, such as language, jurisdictional legislation, and site-specific requirements, allowing you to be specific about your compliance needs at a local level. The system enables you to quickly verify suppliers for the specific countries, categories, sites, and buildings where they work. And that applies right down to the individuals who visit you on-site.
5. Recording any changes to supplier data
One of the biggest risks in supplier management is working with unreliable data. Not only do you want to avoid out-of-date supplier data, but you also need to ensure that any changes have been properly logged. With Canopy, you have a complete date-stamped audit history of every change to the supplier’s profile. In the event of any dispute, this could be extremely valuable information.
Have you taken our quiz yet?
Find out how effective your supplier management processes are and how your systems stack up against best practice. We'll even send you our five-point checklist free of charge, with no purchase necessary. If you've got three minutes to spare, you can redirect to a Typeform here >> https://bit.ly/SM_Quiz2023
To hear more about how the Canopy supplier management platform helps monitor and improve risk and compliance across your supply chains, contact one of the team today.
Post by Nick Verkroost
Nick is an experienced business leader and the CEO for Canopy (OCG Software), the rules-based Supplier Management platform. Nick's focus is on commercial and operational excellence and ensuring our clients maximise the opportunities that Canopy offers.