Managing a Responsible Supply Chain: Development of Leadership

Much has been written about the frustration felt by large segments of the population in more developed nations, as typified by Brexit and the recent US presidential election. The legacy top-down systems of governance seem inadequate in addressing a host of new challenges. The speed and scale of changes brought about by technology, automation, and globalization have simply outpaced traditional institutions’ ability to respond. The result has been an overall loss of confidence in leadership, and subsequently the upheaval we’ve seen in unexpected electoral results.

When facing this type of crisis of confidence in leadership the temptation is to wring our hands about what constitutes the profile of the perfect leader; but that isn’t the right solution for the challenges we face today. Instead, the challenge set before each of us should be to embrace the role of leader in our own work and daily interactions. That requires an investment in the development of leadership capabilities at all levels of the organization and society.

So, what exactly does this mean within the context of managing a responsible supply chain? How do we take something as abstract as the concept of leadership and make it tangible enough to apply to our day-to-day work in concrete ways? I’ll share a few examples of how the BSI Supply Chain Advisory team engages our clients around embedding leadership principles in how they manage supply chain risk.

The first area is within our clients’ own organizations. Many individuals at various levels of most companies aren’t clear on the business case for adopting systematic and scalable ways to manage a supply chain responsibly. Short-term pressures and legacy practices often tempt individuals to seek out the surface-level solution, despite the likelihood and impact of eventual risks. This becomes all the more challenging due to the difficulties many organizations have in quantifying the financial return brought about by sound human rights due diligence. Strong environmental practices often yield more easily measured returns in energy and material costs. Effective supply chain security programs result in a reduction in stolen cargo – another quantifiable return. In the case of workplace exploitation, metrics such as productivity, lost time, injuries, worker satisfaction, turnover and the reduced risk of fire and loss can be harder to gather and calculate, especially across multiple tiers of a supply chain. 

Therefore, the responsibility of the CSR practitioner is to speak to the concerns that senior executives and board members are focused on – long-term value creation, the agenda of institutional shareholders, reputation and brand equity, and the first-mover advantage of maintaining a clear and consistent view of the emerging regulatory landscape. Not only do executives and board members look to practitioners for technical expertise, but also to lead them through the uncertainty of the risks that we deal with in our day-to-day roles. In these cases, this kind of leadership requires the skill and confidence to guide and translate for your boss’ boss, and sometimes to tell them that they may be wrong. That requires preparation, an understanding of how to uncover and leverage data and intelligence, and of course, the confidence and courage necessary to lead your organization’s leaders.

The second area I’ll describe is how to cultivate leaders in a systematic and scalable way throughout the supply chain. Our team has been engaging clients around the concept of how leadership at key supplier sites can be a driver of positive change. When it comes to training, traditionally, one end of the spectrum can be rudimentary and uninspiring (‘Here is a slide deck describing our Code of Conduct …’). More advanced training often focuses on valuable technical instruction on areas like chemical management, fire safety, grievance systems, etc. That type of instruction is certainly useful, but doesn’t necessarily develop skills needed in 21^st century leaders, such as adaptability, critical thinking, empathy, problem solving or the ability to synthesize multiple sources of often contradictory information to make informed decisions in line with organizational strategy. 

When approaching this set of needs, we start with the question of, ‘What makes a great leader or manager?’, and work backwards from the various answers to that. Too often, training is solely focused on compliance and how a supplier can pass an audit. Our thinking in this area focuses on the deeper causes of success, and not the surface result of a measurement. The cultivation of great leadership will result in their creating an environment that naturally leads to safe, productive, profitable, and resilient organizations that understand the needs of their customers, shareholders AND workforce. These leaders will understand the value derived from strong organizational systems, a proactive approach to risk, and a workforce that is empowered to solve problems and drive improvement. When this type of capacity building is carried out systematically through targeting high potential managers at key supplier sites, the impact is deeper and longer-lasting than an attempt to simply document an exercise in checking a compliance box. 

Published by: Ryan Lynch - Head of Corporate Social Responsibility, Ryan has worked with customers from a variety of industries over the past decade to design solutions to support transparency and collaboration across complex supply chains.