{"id":10966,"date":"2023-01-24T10:15:54","date_gmt":"2023-01-24T18:15:54","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10966"},"modified":"2025-05-23T07:50:59","modified_gmt":"2025-05-23T14:50:59","slug":"automating-procurement-and-supplier-relations-to-alleviate-esg-concerns","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2023\/01\/automating-procurement-and-supplier-relations-to-alleviate-esg-concerns","title":{"rendered":"Automating Procurement and Supplier Relations to Alleviate ESG Concerns"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10967″ img_size=”full”][vc_column_text]It is no secret that procurement executives are constantly seeking innovative ways to maximize efficiency and address unexpected supply disruptions.<\/span> With a war raging in the Ukraine, ongoing COVID restrictions in China, and the holistic repercussions that are still being felt from the pandemic, the traditional supply chain is quickly undergoing a digitization revolution for more visibility and control. However, procurement is evolving into much more than the most cost effective option since the cheapest option often involves real world atrocities like child and forced labor.<\/span><\/p>\n

Thanks to social media and readily accessible information, consumers are now more engaged with the ethics surrounding products more than ever, and they put their money where their morals align. However, consumer attitudes toward ethically produced products haven’t had a deep impact on the behavior of most companies as we are now seeing regulatory compliance play a key role. For example, <\/span>roughly 85 percent<\/span><\/a> of companies incorporate sustainable procurement practices due to government regulations and policies and the risk of being noncompliant \u2013 not in response to consumer attitudes. Environmental, social, and governance (ESG) standards are not only aggressively becoming more important for investors, they are becoming mandatory through ever changing regulations and policies around the globe.<\/span><\/p>\n

For importers to the United States, the <\/span>Customs Trade Partnership Against Terrorism (CTPAT) trade compliance program<\/span><\/a> has undergone frequent, recent changes. For example, as of November 2022, the program has added three additional benefits for CTPAT certified organizations:<\/span><\/p>\n

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    1. Front of the line admissibility review:<\/b> shipments detained due to forced labor concerns will have admissibility packages prioritized over non CTPAT members. Prioritized review must be requested at the same time that supporting documentation to Customs and Border Protection (CBP) is submitted.\u00a0<\/span><\/li>\n
    2. Redelivery hold: <\/b>shipments may be held intact at the importer’s facility rather than delivering goods to CBP when forced labor is suspected until admissibility determination or physical examination.\u00a0<\/span><\/li>\n
    3. Detained withhold release order (WRO) shipments move to a bonded facility: <\/b>After a WRO is administered, importers can move inventory to a bonded facility until admissibility determination by CBP.<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

      While these benefits provide some relief for importers who are CTPAT certified, the best strategy is preemptive and ensures no disruption from CBP and other government agencies.<\/span><\/p>\n

      Due Diligence from the Source<\/span><\/h2>\n

      Collaborative supplier relationships cut supply risks and result in a greatly beneficial relationship for all parties involved. The needed connectivity between manufacturers and suppliers means relying on increased digitized processes and solutions.<\/span><\/p>\n

      Instead of relying on manual information processes like spreadsheets, phone, and email, real-time information sharing solidifies relationships with critical sourcing partners.\u00a0<\/span><\/p>\n

      Not only does digitization help with the relationships between manufacturers and suppliers, it also helps improve supplier screening and begin ongoing ESG monitoring. One strategy to consider is evaluation of the use of modern technologies like advanced analytics, machine learning, and artificial intelligence as tools to improve ESG monitoring. Another worthwhile strategy is to begin the exploration of advanced technologies with input from supply chain partners and full transparency to make meaningful improvements to the network.<\/span><\/p>\n

      Effectively Prepare for Impending Legislation<\/span><\/h2>\n

      Supply chain compliance is increasingly dynamic. Environmental concerns, shareholder expectations, labor rights and import\/export compliance requirements are common factors that organizations have to navigate. The most recent piece of legislation is the German Supply Chain Act. This Supply Chain Due Diligence Act was approved in July 2021 and took effect on January 1, 2023. The legislation states that companies with 3,000 or more employees must take appropriate measures to respect human rights and the environment with their supply chains. Companies also need to maintain awareness of pending and changing regulations. Just a couple examples include:\u00a0<\/span><\/p>\n