In the wake of air traffic control disruption at Heathrow Airport, Pawel Jarza explains why air freight needs to be reliable
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With the air traffic control disruption at Heathrow, the impact is also being felt on air freight which is a critical resource for supplying goods that are urgently needed, like fresh produce and critical components for the technology and manufacturing sectors.
Greater resilience around infrastructure is needed to ensure reliable air connectivity for valuable supply chains. Pawel Jarza, Policy, Compliance and External Affairs Director at British International Freight Association (BIFA), commented:
“The impact of the Heathrow air traffic control disruption extends beyond passengers. A significant volume of air freight is carried in the belly hold of passenger aircraft, meaning cancellations, delays and diversions will also have disrupted the movement of goods and affected the businesses that depend on them. Although the technical issue has been resolved, the knock-on effects are likely to continue for several days especially for urgent, time-sensitive or specialist consignments.
“Air freight is particularly important for goods that are perishable, high-value or urgently needed, which includes fresh produce, medical supplies, and critical components for the automotive, technology and manufacturing sectors. Delays can therefore affect product availability, production schedules, and businesses operating time-sensitive supply chains.
“BIFA members will be working closely with airlines, ground handlers, Customs and their international networks to prioritise shipments, assess alternative routes and keep customers informed as the situation changes. Once normal operations have resumed, there will need to be a clear assessment of what further measures are required to strengthen the resilience of the UK’s aviation infrastructure.
“Reliable air connectivity is essential not only for passengers, but for the supply chains and businesses that depend on Heathrow as a major international cargo gateway.”
Wayne Scott, Governance, Risk & Compliance Solutions Lead at Escode, explores whether the UK’s critical software services are genuinely prepared for supplier failures.
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The UK Government has recently published an updated version of the National Risk Register and, as part of its assessment, has rightly recognised that critical software supplier failure represents a national resilience issue. The assessed likelihood of the insolvency of a critical supplier to the UK public sector – with the Government’s reasonable worst-case scenario specifically centred on a critical IT services supplier – has increased from 1–5% in the 2025 Register to 5–25% in the latest edition. That increased recognition should be welcomed. My concern is whether the response goes far enough at a software and service level, particularly when the Government’s assessment assumes that reasonable recovery measures are already in place.
Impact level
Despite the likelihood increasing, the Government continues to assess the overall impact as ‘limited’, something which deserves closer scrutiny. Many public sector organisations have never tested whether they could maintain access to critical software and services without the supplier they rely on. Others may lack the technical assets, knowledge or access required to execute their recovery plans when disruption occurs. This is where the distinction between supplier and service recovery becomes important.
The Government has established mechanisms for dealing with suppliers in financial distress, including Corporate Resolution Plans. From the available guidance, Corporate Resolution Plans appear primarily focused on managing failure at supplier level. That is certainly important, but protecting or restructuring a supplier does not necessarily guarantee continuity of every critical software service it provides.
Practical considerations
For organisations dependent on those applications, there are some immediate practical considerations. Can they continue accessing the software? Do they have the technical documentation and knowledge required to operate it? What happens to the data? If the supplier can no longer provide support, is there a tested route for keeping the application operational? These considerations must be addressed through Service Resolution Plans. Government guidance already recognises service-level continuity planning, but those plans need to be tested against realistic software supplier failure scenarios to establish whether the recovery mechanisms behind them will actually work.
Legal ‘step-in’ rights are a good example. Contractual rights to intervene following supplier failure can provide an important safeguard, but organisations also need the technical capability to exercise them. Without access to the necessary software assets, documentation and expertise, the limitations of those arrangements may only become apparent once a supplier has failed.
Decoding complexity
Modern software supply chains add another layer of complexity. Applications rarely operate independently and software suppliers may themselves depend on cloud infrastructure, SaaS platforms, specialist applications and other technology providers. These fourth-party dependencies can create concentration risks that are difficult for customers to identify. Several seemingly unrelated software suppliers, for example, could depend on the same underlying technology provider. A failure further down that chain could therefore affect multiple critical applications at the same time.
The latest National Risk Register shows some recognition of this problem. It acknowledges that the impact of the supplier insolvency scenario will vary depending on factors including the number of insolvencies occurring simultaneously, with a greater number of failures likely to increase the impact. Understanding these software dependencies therefore needs to form part of recovery planning. Organisations should know what sits behind their critical services, including dependencies beyond suppliers they contract with directly. I would suggest that Government should also be establishing whether existing Service Resolution Plans properly account for these risks.
Financial instability also needs to be considered as part of this process. Current Government guidance includes requirements around assessing and monitoring the financial standing of important suppliers, which can help identify signs of financial stress. However, circumstances can deteriorate quickly and financial information may not always provide sufficient warning before a supplier fails. Recovery arrangements need to account for situations where failure happens unexpectedly and continued access to critical applications is suddenly at risk. There are also areas where Government guidance could provide greater clarity.
Existing procurement guidance recognises circumstances where software escrow can be highly desirable, including where proprietary third-party software is provided by a supplier facing financial stress and a significant risk of failure. However, the treatment of third-party software elsewhere in the guidance can make it difficult to determine when these protections should be considered. There is even an argument that the guidance is contradictory both including and excluding third-party software in various parts.
Commercial off-the-shelf software and SaaS also need clearer consideration too. The value of a software contract does not necessarily reflect the importance of the application it provides. Relatively inexpensive software can still underpin a critical public service, leaving an organisation significantly exposed if access is suddenly lost.
Critical services
Criticality should play a greater role in decisions around software resilience. Organisations need to understand which applications their important services depend upon and ensure the recovery measures reflect the operational consequences of losing them. The Government already has much of the framework required to strengthen this approach. The Sourcing Playbook, Digital, Data and Technology Playbook and Model Services Contract guidance all address elements of supplier and service continuity. Greater clarity around SaaS, COTS software, service-level recovery and the testing of recovery mechanisms would strengthen that existing guidance – and the vital role that escrow plays should be detailed within these documents and not just in the supporting guidance for the model services contract.
Established mechanisms can support this process. Where continued access to proprietary software is critical, software escrow can provide independent access to the software assets required following supplier failure, while verification can establish whether those materials are complete, current and usable. Government and organisations now need to examine Service Resolution Plans at software level, understand dependencies beyond direct suppliers and test whether the technical assets and expertise required for recovery would actually be available following a supplier failure.
The Government’s assumption that reasonable recovery measures are in place needs to be supported by evidence that those measures work. Testing them at service level would provide a much clearer indication of whether the UK’s critical software services are genuinely prepared for the supplier failures the National Risk Register now acknowledges are increasingly likely.
By Wayne Scott, Governance, Risk & Compliance Solutions Lead, Escode.
UK logistics networks could be operating with too little headroom to withstand mounting pressure on the food system, research from global supply chain and logistics consultancy, SCALA, warns
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The report, which is based on a survey of senior supply chain leaders, found that over half (52%) of firms hold less than a quarter (25%) contingency or safety stock, while 71% could increase their UK warehouse capacity by no more than 25%. A further 43% said that no other site could fulfil dispatches if their primary warehouse became unavailable, and only a third (33%) had fully implemented the necessary response strategies, with 52% having partially done so and 14% yet to begin altogether.
While individual businesses have unique requirements that call for tailored supply chain and logistics networks, together, the challenges of limited stock, restricted capacity and a lack of tested alternatives can compound. This leaves logistics networks less able to absorb disruption caused by extreme weather, labour shortages, transport problems or geopolitical events.
The findings come as extreme heat and the decline of ecosystems supplying the UK threaten poor harvests, shortages and higher prices. Farming, retail, food manufacturing and hospitality leaders have already called for a national food resilience plan, warning that secure and affordable food supplies can no longer be taken for granted. This pressure could be further compounded by higher business rates for large logistics properties, encouraging businesses to shift to more efficient rather than resilient supply chains.
Amid this context, SCALA is calling for warehousing and transport to be treated as critical national infrastructure, given their integral role in keeping supermarkets stocked, manufacturers operating and goods moving across the country. The firm is also advising businesses to implement robust contingency plans with alternative sourcing options identified where possible.
Chris Clowes, executive director at SCALA, said: “Food supply chains are already facing growing pressure from extreme weather, geopolitical instability and rising costs. Our research suggests many businesses are entering the next major disruption severely underprepared, largely due to a focus on efficiency over resilience within logistics networks.
“Businesses should identify the suppliers, facilities and processes that could interrupt supply, establish back-up arrangements, and test how quickly stock, people and vehicles could be redirected. Sainsbury’s recent decision to increase supplies of British-grown vegetables is a great example of this thinking in practise.
“The government must also recognise warehousing and transport as critical national infrastructure, with business rates that support investment in resilient logistics capacity. Any national food resilience plan must consider how food will be stored and moved, as well as how it will be produced.”
Pace Technology UK has launched Cold Logic, a new vehicle temperature monitoring platform designed to help pharmaceutical, healthcare and regulated cold chain operators maintain product integrity, improve operational visibility and support regulatory compliance throughout the distribution process
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Developed specifically for temperature controlled logistics, Cold Logic combines live temperature monitoring, GPS journey tracking, configurable alerts and automated compliance reporting within a single platform. The solution integrates with vehicle-mounted temperature probes, refrigeration systems, independent data loggers and API-connected devices, allowing operators to enhance existing fleet infrastructure without replacing installed equipment.
Designed to support MHRA Good Distribution Practice (GDP), Cold Logic provides continuous monitoring across every stage of the distribution journey, from collection and trunking through to cross-dock operations and final-mile delivery.
The platform enables operators to identify temperature excursions as they occur, investigate incidents using complete journey data and maintain secure, time-stamped records to support audits, quality reviews and customer assurance. Automated reporting, encrypted data storage, controlled audit trails and role-based access controls help reduce administrative burden while strengthening compliance across regulated transport operations.
Cold Logic is suitable for pharmaceutical manufacturers, wholesale distributors, healthcare logistics providers, hospital pharmacies, NHS supply chains, clinical trial operations and specialist temperature controlled logistics providers transporting refrigerated, frozen and ultra-low temperature products.
Steve Kealey, MD for Pace Technology UK said: “Cold Logic is redefining how the cold chain logistics sector manages temperature data across its fleets.
“As the latest addition to the Pace portfolio, Cold Logic sets a new benchmark for compliant temperature monitoring by combining modern technology with commercial practicality. The result is a seamless, reliable solution that simplifies compliance, enhances operational visibility, and delivers measurable value for cold chain operators.”
As pharmaceutical distribution networks continue to demand greater traceability and operational oversight, Cold Logic provides fleet operators with a practical solution that combines temperature monitoring, compliance reporting and journey visibility within a single platform.
On Wednesday the 16th of September, Exiger’s Executive Forum will again take place at the Great Scotland Yard Hotel in London
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This time, the topic of the event is How technology leadership separates the prepared from the exposed. We’re always talking and hearing about the need for great leadership in the pursuit of a more intelligent, more secure supply chain. This Exiger Executive Forum will dig into how to achieve that.
SCS/CPOstrategy readers can click here to request a place at the forum
Supply chain risk rarely shows up at its beginning point. Instead, it shows in missed revenue, margin erosion, and customer failure. This is despite the fact that many businesses are implementing tools that can’t keep pace with the velocity of today’s risk landscape.
September’s Exiger Executive Forum will focus on:
Compounding risks, not isolated events
Why leading CPOs manage risk at the product, part, and materials level – not the supplier level
Why all AI risk technologies are not equal
Prioritisation when everything is ‘high risk’
How regulatory acceleration, geopolitical fragmentation, and embedded cyber risk are reshaping procurement risk requirements
Click here to request a space and join your peers at the Exiger Executive Forum
Host:
Ian Cronin, Manager, Advanced Manufacturing & Supply Chains, World Economic Forum
Speakers:
Raimond Kaljulaid, Member of the Estonian Parliament
Koray Köse, CEO and Chief Analyst, Köse Advisory & Senior Fellow, GlobSEC Geotech Centre & Board Member, Slave-Free Alliance
Nathan Peacey, Head of Retail and Consumer, and Tamzin Robson, Associate, at Foot Anstey, explore where the UK is falling behind on human rights in the supply chain, and how we can do better
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A decade after the Modern Slavery Act 2015 (MSA), the UK’s once-leading framework sits at a crossroads. The Independent Anti‑Slavery Commissioner’s recent report finds that the UK transparency-based model is now viewed as fragmented and operating without meaningful enforcement. Under the current regime, businesses can legally comply by submitting a statement saying they have taken no steps to address modern slavery, and the consequences for failing to publish a statement at all are minimal in practice.
As a result, the UK is now significantly outpaced by international developments. The report concludes that a full legislative refresh, centred on mandatory, enforceable human rights due diligence (HRDD) and stronger trade enforcement, is essential to protect workers and ensure responsible businesses are not undercut. For supply‑chain‑intensive businesses reliant on stable, resilient and ethically sound sourcing, this gap poses both operational and reputational risks.
The Independent Anti-Slavery Commissioner warns that without reforms aligned to global standards, the UK risks becoming “a dumping ground” for goods made with forced labour once the EU’s import ban takes effect. Leading businesses and investors share this concern. From major UK retailers to international consumer brands, the consensus is that robust, mandatory HRDD is critical to protect workers, safeguard the UK’s credibility and to protect UK supply chains from structural risk and reputational exposure.
Current state of play: Why the UK needs to strengthen its framework
Voluntary transparency is no longer enough. Section 54 of the MSA catalysed reporting, but it does not require companies to prevent harm, and penalties for poor or absent statements are weak. The result has been inconsistent quality and limited impact for exploited workers. In addition, fragmented domestic rules are adding cost and confusion. Sector‑specific legislation such as due‑diligence‑style obligations in NHS procurement and the Great British Energy Act 2025 has created duplication and conflicting expectations for supply chain operators trying to maintain coherent compliance systems across multiple regimes.
The scale and economics of harm are compelling. The UK faces significant recurring costs from modern slavery (estimated at around £60bn annually), while importing approximately £20bn of goods each year at risk of being produced through forced labour. With the EU’s forced‑labour product ban applying from 2027, the UK risks becoming an outlet for blocked goods unless it aligns its own regime. For supply chain leaders, this introduces a clear operational risk: diversion of non-compliant goods into the UK market could disrupt procurement, create customs delays, and expose businesses to unexpected enforcement.
A broad societal consensus supports change too. Survivors, businesses, investors and the public are all calling for mandatory, enforceable standards.
International developments – and how the UK is falling behind
Over the past decade, many of the UK’s major trading partners have moved from voluntary transparency to mandatory human rights due diligence (MHRDD) and enforceable import controls. The EU has led this shift through the Corporate Sustainability Due Diligence Directive (CSDDD), which from 2027 will impose binding HRDD duties and civil liability across global value chains, and the 2024 Forced Labour Regulation, which bans forced-labour-linked products from entering or leaving the EU. France, Germany and Norway have also enacted due diligence laws requiring structured risk assessment, stakeholder engagement, grievance mechanisms and meaningful sanctions.
Beyond Europe, the United States has tightened border enforcement through the Uyghur Forced Labor Prevention Act (UFLPA), which presumes goods from Xinjiang are made with forced labour unless proven otherwise. Canada, South Korea, Brazil, Thailand, Australia and New Zealand are likewise moving toward due-diligence-based regimes and stricter trade controls.
This global shift reflects a clear consensus: voluntary reporting does not prevent harm, and mandatory, enforceable due diligence is now the international norm. Without comparable reforms, the UK risks becoming an outlier, and potentially a “dumping ground” for goods barred from stronger jurisdictions, undermining responsible businesses and its credibility as an ethical trading partner. For supply chain executives, this means misalignment between regulatory regimes will increase operational complexity and create trade-flow friction unless the UK modernises.
What changes to the UK’s Forced Labour and Human Rights Legislative Framework is the Independent Anti-Slavery Commissioner proposing?
The Independent Anti-Slavery Commissioner’s draft Forced Labour and Human Rights Bill 2026 sets out wide-ranging reforms to bring the UK in line with international best practice. The rules would apply to large organisations with a global turnover of £36 million or more, whether UK-based or overseas but operating in the UK, as well as public undertakings engaged in commercial activity. Financial services providers are expressly included. SMEs fall outside direct regulation but will be affected as part of larger companies’ value chains.
Key proposals include:
A statutory “failure to prevent” duty
Organisations would be legally liable where they cause, contribute to, or are directly linked to serious human rights harms anywhere in their value chain. This shifts the UK from voluntary transparency to mandatory accountability, mirroring the Bribery Act and aligning with global HRDD laws such as those in France, Germany and the CSDDD. Applying the duty to global operations reduces incentives to offshore exploitation and provides clearer expectations for supply chain oversight at every tier.
A “reasonable human rights due diligence” defence
Companies may avoid liability by demonstrating reasonable, proportionate, risk-based due diligence consistent with the UNGPs and OECD Guidelines. This balances firm duties with flexibility, allowing expectations to scale by size, resources and risk, and encouraging continuous improvement rather than tick-box compliance.
Strengthened civil enforcement
A new Office for Responsible Business Conduct would be able to issue public censures, compliance, compensation, costs and restoration notices, a penalty notice of up to 5% of global turnover, and exclusions from public procurement.
These sanctions introduce meaningful commercial consequences, reflecting EU-style enforcement and posing particular implications for public-contract-reliant sectors and for supply chain-heavy industries with complex multi-jurisdictional sourcing models.
Criminal liability for serious abuses
For offences such as slavery, trafficking, GBH or corporate manslaughter, both organisations and consenting/conniving senior officers could face criminal prosecution. This elevates human rights from a compliance issue to a criminal risk, driving greater board-level oversight.
A UK-wide forced labour product ban
The Bill would ban the import, export and sale of goods made or transported with forced labour, including presumptive bans for high-risk regions or products and a public risk database. This aligns the UK with EU, US and Canadian regimes and closes a major gap in current law by stopping forced-labour goods at the border rather than merely requiring reporting. For supply‑chain leaders, this would materially alter customs screening, supplier onboarding, and product‑traceability expectations.
A mandatory annual Human Rights Statement
In the place of the Modern Slavery Statement, a mandatory annual Human Rights Statement would create enforceable disclosure obligations. Organisations above the threshold would be required to publish a board-approved, evidence-based statement setting out any serious human rights harms for which they may be responsible; an explanation where no such harms are identified; a forward-looking plan for prevention and mitigation; and an assessment of the effectiveness of actions taken. The statement would be uploaded to a central public registry, and failure to comply could result in financial penalties, closing the long-criticised enforcement gap in the MSA. This shifts the current voluntary model into a substantive, outcome‑focused reporting requirement.
Next steps and timescales
The Independent Anti-Slavery Commissioner urges the Government to adopt the Bill in the next King’s Speech. The legislation is designed to come into force two years after enactment, giving organisations time to embed human rights due diligence. Within six months of commencement, the Office for Responsible Business Conduct must be fully operational, and within six months of passage the forced-labour database and enforcement regulations must be established. Guidance on reasonable due diligence and other key concepts must be issued within one year.
What should your business do?
Given the practical difficulties in achieving full supply‑chain visibility, together with the direction of travel indicated by key trading partners and the Independent Anti-Slavery Commissioner’s recent recommendations, there is value in forward‑looking businesses taking early steps to prepare for potential legislative change.
This should include measures such as mapping value chains beyond Tier 1 and identifying structural risks and visibility gaps, as well as investing in evidence systems for future human rights disclosures such as traceability tools. Reviewing trade compliance is especially vital for high-risk products and regions, and supply chain leaders should also consider strengthening governance structures and ensuring board-level oversight and integration into procurement processes. The value of fostering a culture which encourages employees to speak up should also not be overlooked.
Supply chain leaders who act early will be best positioned to manage risk, assure continuity and maintain competitive advantage.
In July, we returned to the Exiger Executive Forum, where industry leaders gathered to discuss the issue of modern slavery across the supply chain
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In all elements of business, one of the biggest topics of conversation right now is people. Whether it’s keeping humans in the loop with technology, how to care for people via change management, or wellbeing in the workplace, people are a vital topic.
This extends to how people are treated all the way along the supply chain. The latest Exiger Executive Forum, Human rights in the supply chain: From obligation to operational discipline, dug deep into human rights due diligence and how organisations can demonstrate actual defensible action and compliance.
The event returned to the stunning Great Scotland Yard Hotel in London for the occasion, on the 15th of July. During the course of the evening, an expert panel discussed some of the biggest issues regarding human rights in the supply chain right now, and hopes for how those issues will change.
Matthew Heibel from Aspen Institute Central Europe moderated the evening’s panel. He opened the conversation by outlining the discussion and its goals. “Tonight’s theme is very direct,” he said. “It’s called Human rights in the supply chain: From obligation to operational discipline.
“Human rights risk in global supply chains can no longer be treated as an annual disclosure exercise or reputation issue measured at arm’s length,” Heibel continued. “It is becoming a live operational, legal, strategic exposure. It is about customs clearance, market access, investor confidence, customer trust, regulatory scrutiny and executive accountability. This evening’s discussion will take place in three parts.
“The first part explores the why. The second part dives head-first in the real problems businesses face. The final part seeks to offer realistic solutions moving forward.”
Heibel then introduced the panel:
Caroline Haughey OBE KC
Koray Köse, Founder and Chief Analyst, Köse Advisory & Special Advisor at ODI Global, Senior Fellow, GlobSEC Geotech Centre & Board Member, Slave-Free Alliance
Tim Nelson, CEO, Hope for Justice & Slave-Free Alliance
Erika Peters, Head of Strategic Accounts, Exiger
The ‘why’
Heibel kicked off the why by asking Nelson to frame the issue of human costs, and explain what business leaders need to understand that they’ll never learn from a supplier questionnaire. Nelson’s work with the Hope for Justice and Slave-Free Alliance puts him closest to the human element, after all.
“We can identify five main areas that modern slavery falls within,” Nelson said. “The three dominant areas most people will be aware of are sexual exploitation, labour trafficking, and domestic servitude. The other two – organ harvesting and forced marriage – form part of what is modern day slavery. In the last year in this country alone, there were 19,125 victims. The estimates in this country are anywhere from 122,000 individuals that are held against their will at this moment in time. But from a global perspective, we see that nearly 50 million people are estimated to be in some form of modern day slavery, which is more people now than at any time in human history. 27 million people are estimated to be victims of forced labour, with up to 17.3 million of those exploited within the supply chains of major multinational businesses
He continued: “We’re in a day and an era now where there’s more visibility, more understanding of what the issue is, the problem and how we can solve it. And therefore we are in an era where it is possible to imagine across all aspects of modern day slavery how we can see an end to this as an issue. If we get the right strategy, we enact it with the right level of resources, we can start to close gaps where individuals are falling through the cracks and being exploited. The sad reality of where we are at the moment is not every business doing all that they can. And with what we do at Slave-Free Alliance, our aim is to try and come alongside as a trusted friend to make an impact, to help make a difference in the lives of everyday people.”
Following this, Heibel pointed out that Haughey is on the frontline of the fight against modern slavery. She prosecutes cases and shapes laws as part of her role – so what is the human cost of exploitation?
“Tim Nelson’s charity was the reason that we prosecuted Operation Fort, the largest modern slavery in human trafficking case in Europe,” Haughey explained. “We identified 350 victims. Two were women. All of them were people like you and me. One of them was a guy who accepted the job so he could pay for his mother’s chemotherapy in Poland; another accepted the job so that he could pay for his daughter’s heart transplant in Poland. These were people looking for jobs.
“The job that was offered to them was to be paid £350 a week, sorting rubbish. They would be working in Birmingham. They would be given accommodation, food, and transport to and from work. What actually happened was they were picked up and their travel ID and national identity cards were taken off them. You would find 17 of them living in a house for two with no running water, no electricity, no heating, no cooking facilities. These are ordinary people. Educated and informed people who have agreed to take an opportunity and someone has chosen to abuse their desire to work.”
Köse recently wrote a piece for Forbes which discussed the fact that some people believe businesses can’t afford to play nice, and that human rights are only a priority when they’re convenient. Heibel asked him about this article, and what Köse’s response is to that.
“I turn it around and say that playing by the rules only got us into this mess because we made it a checkbox exercise,” he said. “We wanted to meet the minimum requirements and make sure that our businesses run profitably and efficiently, which caused us to only look as far as needed – and no further. When it comes to the legal sovereignty of a country and state stopping at its border, supply chains don’t. And that’s the conundrum that we are facing when we’re trying to fix a problem that’s bigger than the reach of a single legislation of a single country. Not only that, but we are not responsible enough about the people that make products because our primary responsibility lies in outsourcing for cost and quality. With that we outsource the liability. But at the end of the day, it is all part of one supply chain. The value chain is an ecosystem. If we don’t go beyond what we can see at arm’s length and open the doors beyond the legislation that requires us to really be compliant, then we won’t change the system to be more resilient and just.”
Addressing vulnerabilities and legal standards
Heibel: “Where do you see companies getting stuck: data collection, prioritisation, internal accountability, action, or somewhere else?”
Peters: “The customers that I deal with are all so different. All of those are areas they can get stuck in. It is highly dependent on the maturity of their program. Sometimes I’m really in shock with what I see because I buy from some of these companies myself and they’re the largest in the world. And then they say, ‘I actually don’t know who my suppliers are’. Just understanding who you do business with is a question they can’t always answer. We do help them and over time, and as their program matures each of those areas are addressed.”
Heibel: “Where do you see the biggest vulnerability to human rights abuses in the operating model: sourcing strategy, cost pressure, supplier dependency, subcontracting, or lack of visibility?”
Köse: “The answer is all of the above. But the root cause is a single architectural flaw: we designed supply chains to be fast, cheap, and opaque. We optimised for cost discovery and hid everything else. These vulnerabilities aren’t independent failures – they’re symptoms of the same structural decision: the relentless outsourcing of accountability alongside the outsourcing of production. Cost pressure is the ignition source. When a buyer squeezes a Tier 1 supplier’s margins to an unsustainable point, that pressure doesn’t disappear – it travels. It gets passed down to Tier 2, to Tier 3, to informal subcontractors operating in jurisdictions where labour law is either weak or actively unenforced. That is where exploitation lives – not in the factory that passed your audit, but in the one you didn’t know existed. The reality of things is that deniability and plausible deniability does not exist anymore because you’re looking at every tier as a Tier 1.”
Heibel: “What are the legal standards companies need to comply with both to avoid the “we did not know” defense and about conduct sitting below Tier 1 suppliers? How do they make sure to avoid you [Haughey] in the courtroom?”
Haughey: “What I see from my perspective is the landscape is changing. I got asked quite literally yesterday by a very big magic circle law firm, ‘would it be possible to prosecute a company for conspiracy to traffic humans on the basis of actions that they knew were going on, but that they had failed to address?’ My answer was yes, because they are doing an act and furtherance of the criminal behavior by passively knowing it exists, but doing nothing to prevent it, and having the power to do something. The landscape is changing legally in this way as well. We have the EU director that was handed down in April, March 2024, which means that directors have to take responsibility. It’s the director’s problem. Under the company’s act, they have legal and corporate responsibility.”
Promoting hope
With the problems of modern slavery discussed, Heibel directed the panel to offer some light in the darkness. He asked Nelson how organisations like Hope for Justice can be an asset for businesses when tackling the issue of a more transparent supply chain.
“Within what we do at Hope for Justice, we have this division called the Slave-Free Alliance, which is a trusted friend to big businesses and helps them with the requirements that are placed upon them regarding modern day slavery. So we come in and we provide gap analysis to try and help pinpoint where the problems are and what needs to change. Quite often there are teams internally within companies, but we see most companies have very small teams with limited ability to be able to carry heavy weight in core areas of risk. We can also utilise experiences that we’ve had in one sector and bring it into another sector. It is the combination of great strategic advice, very good resourcing and training and understanding.”
With this in mind, Heibel asked Peters how technology – like the 1ExigerAI platform – can be a force multiplier.
“The problem is extremely large, meaning there’s just no other way to do it than using technology,” she replied. “That’s clear. And therefore in itself, it already is a force multiplier. The good news is that there is so much data out there. And I think that was really the thing that surprised a lot of people doing due diligence. There’s just so much information in this global world of the web that even bringing it all together and being able to tell a picture is actually a lot more doable than people thought.”
When asked for what the rosiest picture of the future of modern slavery in the supply chain could be, Haughey said that the best case scenario situation is that she’s out of the job.
“It’s about preventative action and collaboration with others,” she said. “There is a drive and desire to collaborate without defeating competition. If you invest now, you are not looking at your bottom line this year and next year. You’re looking at perpetuity. I want my own company to be a hundred year company and beyond, but I want it to be a good company. I want it to be a company that I am proud of saying ‘we are trying to do right’. That comes down to a use of data and fearlessness about understanding your data, as well as recognising that AI has many benefits. It’s an amazing thing for scraping information.”
Köse added that a lack of collaboration means that when a problem occurs, the spotlight is really on you – and that realisation often comes after the fact. “If ignorance versus knowledge comes in as cost versus benefit, you’re in the wrong room with the wrong mindset,” he explained, also echoing Haughey’s and Peters’ sentiment about utilising technology. “There is plentiful data in existence. It requires scalable analytics to turn these bits and pieces into a narrative that’s cohesive, clear, and actionable. And, in fact, it does run actions for the enterprise directly in a way that prevents, mitigates, and also quickly contains issues in the agentic AI way.”
Peters rounded up the conversation with a positive outlook based on her experiences with Exiger. “When you talk about human rights or ESG, the individuals who have been tasked with that actually are very forthcoming and they’re very collaborative. They actually do want to get in the room and talk about how they are solving the problem and learn from their peers because actually, there aren’t that many. I see a lot of collaboration in large companies coming together with those individuals.”
The evening’s panel made it clear that human rights due diligence can no longer be a box-ticking exercise, or a static obligation. Nor is it possible to plead ignorance anymore. Human beings cannot be seen as numbers, and modern slavery is not an abstract supply chain risk. It’s real, it’s happening right now, and it’s harming people.
Through a greater sense of responsibility, a proactive response, and valuable data, organisations can root out and put an end to modern slavery – protecting people while protecting their reputations. The conversation doesn’t end with the Exiger Executive Forum, but we all gained valuable insights from the evening.
Thank you to the Exiger team for inviting us to be part of the conversation; we look forward to the next forum.
Kӧse announced the news on LinkedIn this week. His work with organisations like Hope for Justice and Slave-Free Alliance, and the Exiger Executive Forum, has helped put KŌSE Advisory in a position where Kӧse can now contribute his perspectives directly to the World Economic Forum’s policy conversations.
Kӧse said: “We are entering a period where geopolitics, AI, industrial policy, and supply chain risk can no longer be discussed in isolation, because they are colliding and reshaping how companies compete, how governments act, and how value chains are designed, with consequences measured in trillions and in lives.”
Kӧse’s intent is to contribute actionable, tangible insights to the World Economic Forum Expert Network. These insights will be grounded in data, foresight, and human intelligence. This also includes “understanding that stability and security are the foundation from which prosperity is possible, and that the harder questions about who actually controls the AI supply chain”, he said.
“That means challenging bias and prejudice where it exists, and driving intelligence and security-informed thinking into the policy rooms that need it most.”
Fayola-Maria Jack, founder of Resolutiion, asks what businesses can still control when volatility hits
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COVID left a permanent mark on global supply chains, from sudden operational shutdowns and force majeure claims, to labour shortages and an almost universal inability to deliver goods and services as expected.
It was largely a capacity crisis. Businesses scrambled to keep supply chains functioning at all and many assumed it would permanently change how organisations approached resilience. Yet as the Iran conflict began to unfold in March, supply chains were once again forced to absorb new pressures while also dealing with familiar commercial tensions.
COVID vs Iran: What’s changed?
The triggers have changed, but the underlying commercial tensions have not. Cost, control, accountability, and risk transfer have remained at the centre of supplier conflict when conditions deteriorate.
We are, again, seeing disputes around delayed deliveries, stockpiling, unilateral price increases, cash preservation and disagreements over who absorbs unexpected cost escalation. The psychology is also familiar, uncertainty makes parties more defensive, more transactional, and more focused on protecting margin and liquidity.
However, the impact of the Iran conflict is less a repeat of COVID and more an evolution of it. The pressure points are different: energy volatility, shipping disruption through key trade routes such as the Strait of Hormuz, rising insurance costs, sanctions exposure, cyber risk, and inflationary pressure are feeding directly into supplier pricing and delivery commitments.
Friction around contractual accountability is a major theme. Suppliers are increasingly seeking pricing adjustments, timeline extensions, or invoking force majeure when fuel costs, logistical bottlenecks, or raw material shortages affect delivery or performance. Buyers, meanwhile, are pushing back harder than they did during COVID and there is far less tolerance today for broad “global disruption” arguments.
It’s also true that preparedness expectations have changed. In 2020, many disruptions were treated as unprecedented and unavoidable. Today, businesses are much more likely to ask whether a supplier should reasonably have anticipated geopolitical instability and built greater resilience into their operations. Resilience planning, alternative sourcing strategies, and geopolitical contingency measures are now commonly shaped as a demand for clearer responses to known risks.
Visibility is another major difference. COVID exposed how little organisations understood their extended supply chains. Since then, companies have invested heavily in supplier monitoring, analytics and supply chain intelligence. As a result, disputes today are often more evidence based and commercially aggressive. Supplier claims are being scrutinised in far greater detail, particularly around cost pass-throughs, delays, and allocation of scarce inventory.
But, out of all these differences, what’s changed the most is the nature of commercial trust. COVID pushed businesses towards collaboration because everyone was experiencing the same crisis at once. The Iran conflict is much more fragmented and its impact is uneven across sectors, regions, and suppliers. It’s a key change that’s leading to more suspicion and tougher negotiation positions rather than collective problem-solving.
We are also seeing a wider shift from efficiency-focused supply chains towards resilience-focused ones. Businesses are reconsidering supplier concentration risk, geographic dependency, and just-in-time operating models. In many ways, the Iran conflict is accelerating a structural change that began during COVID: geopolitical instability is no longer an exceptional event. It is becoming a permanent commercial condition that businesses must be resilient to.
Why organisations are still caught off guard, despite past global disruptions
After any major disruption, resilience rises quickly up the board agenda. However, after a short period of adaptation, commercial pressure soon returns, pushing many organisations back towards efficiency, cost reduction, and short-term performance optimisation.
In practice, suppliers are squeezed on pricing, inventory buffers shrink, and lean operating models reappear as quarterly performance pressures resume. True resilience requires long-term investment, cross-functional coordination, and uncomfortable trade-offs. Those are far harder to sustain without the right infrastructure.
There is also a tendency to prepare for the last visible crisis rather than the next emerging one. After COVID, organisations diversified suppliers, increased inventory buffers, nearshored selected operations, invested in visibility tools, and introduced more scenario planning. Those were important improvements. But many companies effectively strengthened resilience in ways that were highly specific to the pandemic and effectively prepared for “another COVID” rather than for a world defined by continuous and varied disruption.
Today’s risks are far more interconnected, with geopolitical, cyber, economic, and operational triggers compounding each other. However, many organisations still assess them in silos, rather than as part of a continuously shifting risk environment.
Advice for supply chain leaders going forward
The next decade is unlikely to be defined by isolated crises. Instead we can expect continuous and diverse events that trigger new instability and for disruption to become part of normal commercial operating conditions.
Resilience therefore needs to be a leadership capability, not a logistics exercise. Supply chain leaders cannot control world politics or the economy. However, they can control the visibility they have, the quality of decisions made, actions taken under pressure, and the strength of the commercial relationships they foster. Three of the most practical strategies are:
Strengthening the supplier ecosystem before the crisis arrives
Disputes happen frequently. Any organisation that suggests otherwise is simply not paying close enough attention to their delivery ecosystem. This doesn’t necessarily mean a claim, but instead an inability to find a prompt consensus on issues.
The strongest supplier relationships are built before the crisis arrives, not during it. This means creating shared expectations early, clarifying escalation and resolution pathways, and understanding where friction is most likely to emerge if costs, lead times or delivery assumptions shift.
Prioritising decision quality and speed
Success is determined less by contingency plans and more by the quality of decision-making and actions taken under pressure. When assumptions change, organisations need clear ownership, rapid escalation and the ability to assess commercial impact before delay becomes delivery failure or cost leakage.
Treating commercial trust as operational infrastructure
Supply chains do not fail in isolation. They fail through weak visibility, delayed decisions, and fractured commercial relationships. For organisations to outperform during disruption they must be coordinated; able to surface conflict early, maintain trust under pressure and resolve issues before positions harden.
Can resilience be a competitive advantage?
Businesses are no longer competing solely on product, price, or scale. They are competing on stability, adaptability, decision speed, and the strength of the relationships that sit behind delivery. Increasingly, resilience and conflict management are becoming measurable competitive advantages rather than simply risk management disciplines.
In complex commercial environments, this is no longer built through reactive firefighting alone but through visibility, alignment, structured collaboration, and the ability to detect pressure points before they become operational or financial failures. Organisations must deploy the right processes and tools to proactively manage commercial friction, strengthen supplier and customer alignment. This will ensure issues are resolved earlier and businesses will outperform those still relying on fragmented processes and siloed communication.
The conversation is therefore shifting from “How do we survive disruption?” to “How do we outperform through disruption?” And increasingly, the answer lies in the quality, intelligence, and responsiveness of commercial infrastructure.
Juanjo Mestre, CEO and Co-founder of Dcycle, digs into what supply chain leaders need to know about CSRD
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For years, sustainability reporting focused largely on what companies could measure within their own operations, such as energy use, waste and direct emissions.
Under CSRD (corporate sustainability reporting directive), that centre of gravity is shifting into the supply chain. Emissions, resource use, labour practices and risk exposures increasingly sit several tiers beyond the reporting entity itself. Companies are no longer being asked simply to disclose sustainability metrics; they must now support them with supplier data that is traceable and able to withstand audit scrutiny.
This shift doesn’t just raise expectations for reporting, it fundamentally changes how supply chain data must be collected, managed and trusted.
At its core, supply chain data management is about how organisations collect and manage supplier information to support both day-to-day operations and long-term decisions. Historically, that information has centred on cost, quality and delivery. Sustainability introduces a new layer: carbon intensity, material origin, process data, certifications and social indicators.
CSRD brings sustainability into the same accountability space as financial reporting. Yet our research shows that just 19% of business leaders fully trust their ESG data, compared with 68% who trust their financial data. That gap highlights the urgency of building financial-grade systems for sustainability information.
Data must be consistent and defensible. Achieving that requires clear structures, aligned processes and defined ownership across procurement, sustainability, finance and operations.
CSRD increases dependency on supplier data
CSRD doesn’t just expand disclosure requirements, it increases reliance on supplier data. Sustainability teams are becoming more dependent on procurement to gather ESG information from suppliers, many of whom are facing reporting requests for the first time, often from multiple customers and across overlapping frameworks.
The challenge is a structural one. Supply chains were not built with sustainability reporting in mind; they were built to move goods efficiently and at the right price. As a result, much of the data companies now need sits buried several layers down – patchy, loosely defined and difficult to validate with confidence.
A common misconception is that supplier ESG data simply needs to be collected. In practice, it must be aligned, checked and contextualised before it becomes usable. What companies receive is often estimated, based on differing methodologies, or tied to mismatched timeframes.
This creates a reliability gap between what is reported and what can be defended. Under CSRD, that gap becomes a material risk. Numbers need a clear trail behind them. Generic averages and opaque assumptions are increasingly difficult to justify, particularly as limited assurance is already required and deeper scrutiny will follow.
Some reports may appear complete on the surface but fail under audit or stakeholder challenge. That is where exposure lies.
Why spreadsheets and point tools break down at scale
Many organisations are trying to manage CSRD requirements using spreadsheets, email surveys and disconnected ESG tools. That may work during a pilot phase, but it quickly breaks down at scale.
Files drift across inboxes, assumptions become buried in formulas, and version control deteriorates. Over time, small errors compound into material risk.
Email-based supplier surveys create weak audit trails, while single-purpose tools solve narrow problems but rarely connect the full picture. As supplier numbers grow, control declines, teams spend more time chasing data than validating it, quality becomes reactive, and reporting turns into clean-up.
Audit-ready sustainability reporting depends on structured inputs and transparent methodologies. Supplier data must map to recognised frameworks, with calculation bases, emission factors and sources clearly documented. Validation should happen at the point of submission, not in the final weeks before a reporting deadline. Changes must be tracked transparently, not quietly overwritten.
The preparation window is closing
CSRD readiness is not a last-minute reporting exercise. It depends on the maturity of supplier data, the consistency of methodologies applied across tiers, and the infrastructure in place to collect and validate that information. None of this can be built in the final weeks before filing.
The organisations making real progress are treating CSRD as a supplier data transformation effort. They are mapping supplier dependencies, identifying weak points and putting structured collection and validation processes in place now.
Because once reporting is assured, the question is no longer whether you have a number, it’s whether you can stand behind it.
At Manifest 2026, one theme is impossible to ignore. The conversation across supply chain, procurement and finance has shifted from…
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At Manifest 2026, one theme is impossible to ignore. The conversation across supply chain, procurement and finance has shifted from visibility and analytics towards autonomy and execution. Few companies embody that shift more directly than Freehand, whose co-founder Nitin Jayakrishnan is focused on redefining how enterprise work gets done…
Freehand builds AI agents for procure-to-pay processes across complex spend categories, working primarily with large global enterprises across manufacturing, distribution, retail and services. The company’s aim is not simply automation, but a fundamental redesign of how operational teams function, combining human teams with AI “employees” to reshape procurement, logistics and finance.
Speaking at Manifest, Freehand co-founderNitinJayakrishnan argues that many enterprises are still structured for a world that no longer exists. “And the response has been the same for 30 years,” he explains. “More people, more outsourced teams, more BPOs. That playbook doesn’t scale anymore.”
Which is where Freehand can help. A newly launched, agentic AI platform designed for supply chain and spend management, emerging from stealth in February 2026, Freehand replaces manual, BPO-heavy workflows. It acts as an AI-powered alternative to traditional Business Process Outsourcing (BPO) by automating complex, high-friction tasks like freight audit, payment processing, and procurement.
Living with permanent disruption
Supply chains are no longer temporarily volatile. Instability has become structural. “There used to be a time when enterprises thought of supply chain costs as unpredictable,” Jayakrishnan tells us. “It’s now been going on for so long… five, six years… almost every quarter you’ve had either a large global pandemic or a war or a trade war or a tariff or a compliance issue.”
Because of this, the largest organisations are no longer planning for predictability. They are planning for agility. They need to sense change continuously and react immediately. Yet many still struggle to do so. According to Jayakrishnan, the problem is not a lack of data, but the wrong kind of data.
Enterprise systems record transactions, but they do not capture context. They document what happened, not why decisions were made. “They capture the ‘what’, but they don’t capture how you got there,” he explains. “The ‘why’ of how decisions are taken is not captured in software. It’s captured in emails, in phone calls, in documents, in spreadsheets.”
Without this context, organisations cannot respond effectively to disruption. Even if they could see everything, acting quickly would still be difficult without autonomous decision-making. “You can’t depend on hundreds of thousands of teams and people to decide and act in real time,” he says. “That takes months, not minutes…”
Expert feedback says retailers are unprepared for Extended Producer Responsibility (EPR) rules around packaging
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Josh Pitman, Managing Director at sustainable packaging firm Priory Direct, has warned that retailers are unprepared for Extended Producer Responsibility (EPR) rules around packaging, for which fees went live in October, with the firm fielding hundreds of customer queries.
EPR fees came into play from 1 October for ‘large’ producers including many affected retailers and Pitman, whose firm supplies planet-friendly packaging to more than 21,000 businesses, says: “The retail sector is simply not prepared for this shift in how their packaging data needs to be reported, and the fees payable based on weight, material and recyclability of packaging. This is particularly true of the ‘majority middle’, or those that fall just over the threshold.
“We know this because for many weeks, we’ve been dealing with between five and ten queries daily from our customers on our website chat function and directly to account managers. Many of these are basic questions like: does EPR apply to them, what data do they need to share, where do they get this from, and how do they reduce exposure to it? These are all basic but critical details that should have been established months ago, as reporting requirements have been in play since 2023.
“However, there appears to be a lack of clear, helpful guidance and limited proactive engagement with affected businesses from government, aside from some overly exclusive and expensive events featuring official spokespeople. Knowledge of how to navigate EPR is being firewalled by companies looking to profit from guiding larger clients through the change when, for it to make the most impactful change, the government should be providing clearer, more-open-access guidance on how to use this legislation to actually make a positive improvement to the impact of their business.”
He adds: “This means it is falling to the private sector to give practical support to retailers, who are seeing headlines like John Lewis revealing a £22 million cost through EPR and are rightly concerned. Without this support, these businesses would struggle to respond to EPR legislation and – what is most crucial – adopt more sustainable packaging choices to limit their exposure to the fees. Otherwise, there is a real risk that business will simply absorb the fees rather than do what EPR is designed to achieve, which is to spur a switch towards more environmentally friendly packaging.”
Extended Producer Responsibility has changed the way UK organisations responsible for packaging must carry out their recycling responsibilities. For the purposes of EPR, packaging is defined as any material that is used to cover or protect goods that are supplied and that makes handling and delivering goods easier and safer. It includes anything that’s designed to be filled at the point of sale, such as a coffee cup. This definition encapsulates a wide range of businesses including many retailers.
‘Producers’ are defined as either ‘small’, with annual turnover above between £1 and £2 million and importing or supplying 25 to 50 tonnes of packaging, or ‘large’, with a turnover above £2 million and importing or supplying more than 50 tonnes of packaging. Both small and large producers must report their packaging data, but currently only large producers need to pay fees. These producers will have received their very first invoice – or Notice of Liability (NoL) – this month, October 2025.
Pitman concludes: “This is a real opportunity for all retailers to minimise their exposure to EPR by switching to more sustainable alternatives. The cost of these alternatives is, in the majority of cases, the same or lower, as well as incurring lower EPR fees, and such steps also help to reduce the overall environmental impact of these retailers. This is a positive move at a time when legislative and consumer pressures on retailers around ESG are growing. With clearer, more practical guidance for those affected, EPR is the carrot that could make a dramatic difference to retailers’ impact on the planet.”
Dave Howorth, Executive Director at global supply chain and logistics consultancy, SCALA, discusses the ways in which food scarcity can be adjusted to.
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Empty supermarket shelves are becoming increasingly common in the UK; they act as an unsettling reminder of just how fragile our food supply has become. From climate-driven crop failures abroad to shifting political alliances and trade tariffs, the systems we rely on to stock our fridges are under increasing pressure. Once optimised for speed and cost-efficiency, today’s global food supply chains are straining under the weight of unpredictable and often overlapping crises.
The UK is heavily reliant on food imports, which renders it particularly vulnerable. Disruptions abroad can lead to ripple effects on domestic prices, availability, and consumer confidence. It’s imperative for retailers, food manufacturers, and logistics providers to reassess sourcing, transportation, and forecasting strategies to ensure food security for the long-term.
Climate and trade disruptions
Recent research underscores the vulnerability of specific crops. For example, a report by Christian Aid warns that climate change poses a severe threat to bananas, the world’s most consumed fruit and a dietary staple for over 400 million people. Alarmingly, by 2080, nearly two-thirds of banana-growing areas in Latin America and the Caribbean may become unsuitable. This is due to rising temperatures, extreme weather, and climate-induced pests. And this is not the first crop which is vanishing from UK shelves; recent reports highlight that oranges, grapes, and even tinned sardines have all been in short supply, demonstrating the very real threat of food scarcity.
Simultaneously, Trump’s tariffs could exacerbate the UK’s challenges when it comes to accessing affordable imports. Whilst the recent US-UK trade agreement has introduced certain concessions, significant challenges persist. Crucially, tariffs can lead to higher prices for imported goods, affecting both producers and their consumers in turn. Combined, these factors contribute to a volatile food system which could struggle to deliver consistent, affordable supply.
Building resilience: strategic imperatives
The good news is that a strategic, long-term approach to sourcing can help cultivate food security. The following approaches can make all the difference when it comes to building this resilience.
1. Data-driven forecasting
Advanced analytics and scenario planning are critical tools in navigating changing circumstances. AI-powered forecasting models can assess historical sales trends, climate patterns, political risk indicators, and market signals, enabling supply chain leaders to anticipate potential shortages and make informed sourcing and stocking decisions. However, accurate forecasting depends on quality data, necessitating transparency and collaboration across the entire supply chain to ensure everyone is working from the same point of ‘truth’.
2. Diversified sourcing
Relying on a single region or supplier for essential goods is a recipe for future disruption. Developing multi-sourcing strategies that include a mix of global, regional, and local providers can enhance resilience – ensuring that if one supplier can’t provide, a contingency is already in place to meet demand. While this approach introduces a level of complexity, it enables agility in responding to disruptions – whether by shifting to alternate trade partners or tapping into contingency inventories.
3. Collaborative resilience
The pandemic only underlined the necessity of supply chain collaboration and agility. Joint planning between manufacturers, retailers, and logistics providers can enable smarter demand sensing, shared transport solutions, and strategic stockholding that protect availability and the flow of product during turbulent times. Initiatives like shared visibility platforms and collaborative planning forums facilitate a shift from reactive to proactive resilience-building.
4. Nearshoring considerations
Interest in nearshoring or reshoring food production is growing as businesses seek to reduce reliance on vulnerable global trade routes. While challenges such as higher labour and land costs exist, nearshoring can offer greater control, shorter lead times, and reduced exposure to geopolitical risk. However, its feasibility depends on product type, resource availability, and long-term infrastructure investment. As such, nearshoring needs to considered as one component of a broader resilience strategy that is unique to each business.
Strengthening the foundations of food supply
To navigate the road ahead, businesses should shift from an efficiency-first mindset to one that equally prioritises endurance and adaptability. This entails investing in forecasting tools, diversifying sourcing strategies, embracing collaboration, and considering structural changes like nearshoring. Food scarcity is not inevitable – but avoiding it requires rethinking the supply chain.
Without a critical supplier, entire operations for an organisation can come to a halt.
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Most modern organisations rely heavily on their supply chain partners to deliver their products and services. In the case of critical suppliers, organisations might not be able to provide most of their products and services without them. Resilience is key!
In some cases, without a critical supplier, entire operations for an organisation can come to a halt. For example, if the point-of-sale (POS) service provider is down at a retailer, they cannot bill their customers. Disruptions can strike unexpectedly, causing significant financial losses, operational challenges, and reputational damage.
Over the last few years, supply chain disruptions have gained much more executive attention due to Covid-19 and geopolitical conflicts, but they have been happening all the time even before.
In this article, Robin Agarwal, Head of Supply Chain and Operations Services at 4C Associates explores the importance of resilience in supply chains and practical strategies to enhance it.
Supply chain disruptions can happen due to many reasons, some of the most common are:
Financial disruption
A critical supplier suddenly going out of business is the biggest nightmare for senior supply chain executives. In most cases, the organisation should have alternate options, but it can take weeks, if not months, to ensure the return to business as usual. I have seen in many of my clients, procurement and supply chain executives spending weeks and weeks of dedicated time to resolve supplier bankruptcy issues while suffering significant disruption in their operations and financial losses.
Even smaller cash flow problems can take a toll on supplier performance, where I have seen suppliers not being able to fulfil the orders as needed as they are not able to pay on time for their operations and supply chain.
Reputational damage
Organisations today face intense scrutiny from the media, customers, and increased ESG regulations. A negative ethical or social incident (child labour, environment violations etc.) within your supply chain, especially when it comes out in public, has a huge reputational impact on the organisation. Executives have to react quickly in such cases and make changes to ensure integrity in their supply chain. During the horsemeat scandal I saw significant resources at my food manufacturing client going into reviewing the supply chain and marketing money going into assuring the customers.
Legal risks
Geopolitical tensions and sanctions can impact suppliers’ ability to deliver goods or risk. Organisations operating with global supply chains need to assess and mitigate these risks. Complex manufacturing organisations saw massive disruptions in their supply chain in the aftermath of Ukraine-Russia war. A major area of focus for organisations today is scrutinising their supply chain for dependency on BRICS nations.
Natural disaster
We all know what happened during the Covid-19 pandemic and how it prompted organisations to review their supply chain strategy. However, this is not a new issue. For example I was part of a risk and resilience project for a major automotive original equipment manufacturer (OEM) that was commissioned in the aftermath of Floods in Thailand paralysing their supply chain.
Tier –N supplier disruption
Most of the big suppliers have complex supply chains. Any impact on these Tier 2, 3 suppliers can create a significant impact as well, depending on how mature is your supplier resilience. This is the most common issue I come across. While most organisations consider these as their supplier problem, when happen, they need to bear the impact as well.
The list above is not exhaustive and there are many other complex issues, ranging from cyber disruptions to boats carrying goods stuck in the Suez Canal.
The false sense of security
Many organisations operate under the assumption that supply chain disruptions won’t happen to them. They focus on cost efficiency and day-to-day operations, neglecting proactive risk and resilience management. However, this reactive approach can be detrimental when disruptions occur as there is no framework to deal with such disruptions. In these cases, senior management has to spend a significant amount of their time while incurring higher costs. And longer time to recover than their competition.
Risk monitoring tools: Necessary but insufficient
There are many tools available to supply chain professionals today from getting financial assessments of their suppliers, sanctions watch, to supplier ESG ratings. These risk monitoring tools help identify potential issues, but they often lack real-time predictive capabilities. Organisations receive retrospective alerts, leaving them scrambling to respond. Additionally, false alarms can lead to decision paralysis.
At the time of Carillion’s bankruptcy, none of these tools were able to give any actionable warning to the companies. Also, most organisations have an extensive risk framework for onboarding a new supplier, but they don’t have an effective risk framework once the supplier is in operation. And dependency increases over time with warning signs, if any, ignored.
The case for resilience
Resilience is the antidote to vulnerability. While organisations cannot predict every risk event or control how the events unfold, it is in their gift to build adaptive capacity to withstand shocks and recover swiftly. Here are some of the basics for how organisations can enhance supply chain resilience:
Supply market resilience
Overreliance on a single supplier or a geographic location affects resilience. Organisations should consciously diversify their supplier base, even if it means higher short-term costs. Also, they should know the alternate suppliers that operate in the market and have relationships with them even if they have no immediate plans to change suppliers. It would not only enhance resilience, but also help improve cost.
Know your supplier
Understand the key dependencies with your supplier including within their supply chain. A mature organisation should know the key people to reach out to in case of disruption. And who they should even bring on board if the supplier goes bust.
Contingency Planning
Develop clear contingency plans for various disruption scenarios. These plans should outline roles, responsibilities, and escalation procedures. Ask your suppliers about their contingency plans and how they will ensure business continuity when various risk scenario unfolds.
Operational Resilience
Have Contingency-SOP instructions in place. Capture the specifications and know-how on what suppliers are delivering so alternate options can be switched on swiftly if needed.
However, just having contingency plans written is not enough. Contingency plans must be stress-tested for viability and supply chain and business stakeholders ‘fire-drilled’ through those plans, so they are aligned on key steps when disruption happens, and precious time is not wasted arguing about the next steps. True resilience is an organisational culture and employees at all levels should understand their roles during disruptions.
An ongoing process
As concluded by Christopher Jones, Procurement Director at Alstom, “Resilience planning needs to be an ongoing process, your supply base and requirements are constantly evolving. Having stress tested plans means that when disruption lands your teams are ready to act and deal with the issues.”
Supply chain disruptions are inevitable, but organisations can minimise their impact through resilience. By embracing proactive risk management practices and fostering a resilient culture, organisations can navigate disruptions with confidence and stay ahead of the competition.
While environmental and climate change used to be the main topic of discussion, human rights and supply chains have taken over
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In recent years, supply chains gained momentum as the leading social issue for companies to address. While environmental and climate change used to be the main topic of discussion, human rights and supply chains have taken over. This is partly due to the scandals and allegations of exploitative labour practices from multinational companies. But also due to the increased public awareness of the role companies play in determining the management of their own supply chains.
Social sustainability
The shift to focus on social issues acknowledges the profound impact that supply chains can have on our communities, labour rights, and societal well-being. Progress has been made in greening supply chains, but addressing social sustainability is a complex challenge yet to be achieved. A holistic approach that integrates social responsibility in a meaningful way into every aspect of the supply chain is the way to go. Then businesses can make a difference in the long-term.
Understanding the social issues in supply chains
First and foremost, we need to understand what the risks and impacts are in supply chains. These largely depend on the industry and the part of the world where a given company works. Social sustainability in supply chains encompasses fair labour practices, human rights protection, community engagement, diversity and inclusion, and ethical sourcing. Building social sustainability requires a more thorough look at these issues:
Labour related issues
Labour exploitation
Supply chains often involve complex networks of subcontractors and suppliers. This can lead to challenges in monitoring and ensuring fair labour practices. Exploitative conditions such as low wages, long hours and unsafe working conditions can be prevalent, especially in industries like manufacturing and agriculture.
Worker welfare
Ensuring the well-being of workers throughout the supply chain is essential. This includes addressing issues around child labour, forced labour, discrimination, lack of access to essential benefits like healthcare. Issues around exploitation and worker welfare are especially troubling in the gig economy or in sectors with seasonally contracted workforce.
Labour rights violations
Encompassing the restriction on freedom of association and collective bargaining. I have had several clients whose subcontractors employed workers without employment contracts, completely violating local labour laws.
Human rights risks
Ethical sourcing
Companies face challenges in ensuring that their supply chains are free from human rights abuses, modern slavery, human trafficking and exploitation. Ethical sourcing policies and enhanced due diligence can screen out suppliers who can’t comply with legislation.
Conflict minerals
Sourcing minerals from conflict-affected regions can contribute to human rights abuses and armed conflict. Companies can implement measures to trace the origin of minerals and avoid financing conflict or further contribute to human rights violations.
Indigenous rights
Many supply chains involve land acquisition for resource extraction in areas inhabited by indigenous communities. Respecting Indigenous rights, including land rights and cultural heritage is crucial to avoid access restrictions to natural resources.
Community and land-related aspects
Land displacement
Though, we previously mentioned land issues in relation to indigenous people, supply chains might lead to land grabs from other communities. Proper consultation, compensation and resettlement plans are necessary to mitigate the negative impacts on affected communities.
Community engagement and development
Enterprises have the responsibility to contribute positively to the communities where they operate. In certain developing countries, these manufacturing facilities provide the only ‘good’ jobs and communities rely on them economically. Engaging with the communities and supporting local development through CSR programs is a popular way for companies to build lasting relationships.
Strategies and Tools for Enhancing Social Sustainability
Achieving social sustainability in supply chains requires a multifaceted approach that integrates social considerations into every stage of the supply chain lifecycle. When I work with my clients, I always look at three key pillars: legal requirements, voluntary standards, and management systems.
Legal requirements
The EU’s adoption of the new directives specifically targeting human rights and environmental impacts in supply chains adds to the long list of legal requirements companies need to follow to address modern slavery risks and practice corporate responsibility globally. Most of the legislation is not prescriptive in terms of what needs to be done exactly. But they do require companies to enforce corporate level standards on suppliers. Some companies have started including standard contractual clauses that require suppliers to follow legislation and adhere to the company’s policy on social topics.
Voluntary standards and certifications
There is a wide variety of voluntary standards and certifications that companies can explore on their social sustainability journey beyond legal compliance. Plus, there are certifications on Fair Trade, SA8000, Ethical Trading Initiative (ETI) Base Code and decent work. There are also some more sector specific standards and certifications such as ethical fishing for food producers. It is up to companies to decide if they want to improve their practices by updating systems in line with best practices.
Supplier collaboration
Supplier collaboration through the provision of capacity building and training are great tools to raise awareness on labour rights, health and safety, diversity and inclusion and support suppliers to establish their own traceability systems. Typically, the supplier code of conduct is a legal requirement, but it could be extended to include more detailed expectation. These might include labour standards, human rights, environmental practices and ethical business conduct.
I would consider community investment through CSR programs as a voluntary initiative that allocates resources towards community development. It is ideally driven by the needs of locals and might include a combination of paying for services and providing training or education.
Management systems
Company management systems include the collection of policies, processes and management plans. Most of the policies are legal requirements as per my previous points. However, there can be additional policies focusing on areas where the company is exposed to risks in the supply chain. For example, HR policies typically include minimum age requirements.
Although, if the risk of child labour is relevant to the company, they might decide to have a separate policy on the prohibition of child labour. Following on from this example, a management plan would identify the risk of child labour. Whether it is for direct employees, contractors or subcontractors. This will describe a process to verify, record, audit and report on the age of workers. Supply chain specific management plans might include traceability and mapping, a supplier management plan, a supply chain risk assessment plan etc.
Stakeholder enagagement
The other important aspect of a company’s management system is stakeholder engagement and complaints management. Effective stakeholder engagement can facilitate the feedback mechanism from communities and workers in the supply chain.
Creating socially sustainable supply chains is not just a moral imperative. It is also a strategic business imperative in today’s interconnected world. If we prioritise social responsibility by embedding it into the operations, businesses can mitigate risks, enhance reputation and create value for society. Ultimately, building social sustainability requires a collective effort involving businesses, governments, civil society and other stakeholders.
We need to work together towards common goals to create supply chains. Not only to deliver economic value but also promote social justice, equity and dignity for all.
Ildiko Almasi Simsic is a social development specialist and Founder of E&S solutions which has developed the world’s first E&S specific research assistant – myESRA™.
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