Ted Datta - Director, GRC Solutions (UK & Ireland), Bureau van Dijk

Are you ready to do the right thing?

Playing your part in supplier due diligence

CPO event 22.11.2016

Ted Datta Director - GRC Solutions (UK & Ireland)

Bureau van Dijk

Overview

The key issues surrounding supply chain due diligence

Case studies: two contrasting approaches

Takeaways: the latest data & visualisation tools

But first, a Question

How should ‘Procurement’ contribute to supplier due diligence?

1. Establish supplier due diligence policy and management framework

2. Establish working groups to create policy and frameworks

3. Feed specific requirements into policy and frameworks

4. Managing suppliers against policy and frameworks

What are they key issues facing supply chain due

diligence?

Key Issue (1) – Ethical Procurement

Modern Slavery, Human Trafficking & Forced Labour

.

21 million people are victims of forced labour – 11.4 million women and girls and

9.5 million men and boysNearly 50% of 533 corporate respondents

surveyed stated Human Rights was the number one issue in the coming 12

months

https://www.theguardian.com/global-development/2016/jun/10/court-finds-uk-gangmaster-liable-for-modern-slavery-victims-kent-chicken-catching-eggs

Key Issue (2) – Corporate Transparency

Anti-Corruption Beneficial Ownership

https://www.theguardian.com/uk-news/2016/sep/12/prosecution-failure-prevent-fraud-by-staff-white-collar-crime

Key Issue (3) – Political & Economic Uncertainty

http://www.bvdinfo.com/en-gb/blog/supplier-and-credit-risk-management/retailers-focusing-on-supply-chains-since-brexit-v

Case Studies

Contrasting approaches to due diligence

Case Study – 1

“Going it alone…”

Retailer – £1.5bn

Low-cost sourcing model(s)

Emerging market supply chain

Industry & Organisation

The business challengeBusiness challenge

Renewal of banking agreements due imminently

New covenants imposed by primary banks

Vet all suppliers against Sanctions

Sanctions

Trade restrictions on dealing with certain entities & individuals

State owned entities (SOEs) and special designated nationals (SDNs) focus of regimes

Punitive fines & reputational loss

http://www.wsj.com/articles/schlumberger-unit-expected-to-plead-guilty-to-violating-iran-sudan-sanctions-1427312135

Stand-off…

Project leadership

Solution (project 1) – Data Quality

Solution (step 3) – purposeful testing Solution (project 2) – Supplier Segmentation

Solution (project 3) – Risk Model

Output

ContentCapability

128 “red-flags” identified

Outcome

Role of Procurement

Running three separate projects at once!

Left alone to build a risk model for supplier screening

Balance “commercial” and “compliance” supplier relationships

Lessons learnt

Build connectivity to the sourcing process

Focus on what happens next – ongoing monitoring

Collaborative “working groups” are not easy to create

Case Study – 2

“Better together…”

Pharmaceuticals – £16bn GBP

Highly regulated sourcing

Globally integrated supply chain

Industry & Organisation

The business challengeBusiness challenge

High profile bribery & corruption scandal(s) within industry

External auditors identified gaps in current process

Global supply chain of >15,000 entities

3rd Party Due Diligence Programmes

! HIGH VOLUMES ! MULTIPLE TIERS

Not just suppliers (all third parties)

Lots of Interested Parties

FINANCE TECHNOLOGY

COMPLIANCE, LEGAL & TRADE SANCTIONS

Not just procurement (diverse project group)

Live Process: Global Pharma ClientSolution (1) – design the end-to-end process

Due Diligence

Live Process: Global Pharma ClientSolution (2) – streamline the end-to-end process

Due Diligence

Outcome

Streamline due diligence process upfront – fail fast!!

Total coverage of 3rd parties, not only “perceived risk”

Less reliance on manual questionnaires

Role of Procurement

Designing the end-to-end business process

Engaging specific subject matter experts for input

Achieve automation where possible

Lessons learnt

Upfront due diligence saves time and cost

Industry standards are consistently rising

Senior sponsorship from the outset is critical

Takeaways

Latest data & visualisation tools

Unravelling the corporate world…

…to help you make informed decisions

Introducing RepRisk

“

“Environmental, social and corporate governance business intelligence…”

Takeaways

Supply chains are about more than just supply

Be ready to answer questions about effective due diligence

The only approach is a joined-up approach

And finally, that Question

How should ‘Procurement’ contribute to supplier due diligence?

1. Establish supplier due diligence policy and management framework

2. Establish working groups to create policy and frameworks

3. Feed specific requirements into the policy and frameworks

4. Managing suppliers against the policy and frameworks

5. All of the above