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Complexity in Natural Resources: The Benefits of a Unified Approach to Supplier Risk Management

Article, Industry Insights

Complexity in Natural Resources: The Benefits of a Unified Approach to Supplier Risk Management

Natural resources often come from diverse and remote locations. Extracting, processing, and transporting them often involves complex supply chains and numerous stakeholders. Ensuring your suppliers are meeting your fair labour and environmental policies and respect indigenous rights and other concerns is increasingly important for maintaining the license to operate.

Increasingly, being able to demonstrate an ethical supply chain also plays a role in how companies are valued.  Deloitte found that companies with better ESG performance are valued higher in the market – approximately 1.2 times higher EV/EBITDA multiple.

The Cost of Complexity

Many companies in the natural resources sector struggle with handling the supply chain element of their ESG reporting obligations because financial, health and safety, and environmental data is spread over lots of different systems, often in different formats.

A 2023 Bain & Company’s Energy & Natural Resources Report highlighted the need for integrating data management systems within the sector to address complexity and inefficiency, particularly in supplier due diligence. The report emphasized how fragmented data systems can lead to increased operational costs and compliance risks.

Fragmented data systems also make it hard to respond to changing legislation, like Canada’s strict methane regulations and Bill S-211 which mandates reporting obligations on entities to prevent and reduce risks related to forced labour or child labour in their supply chains. They also often lead to a fragmented view of supply chain health and risk hindering supply chain visibility; obstructing proactive risk management and frustrating the decision-making process.

Staying ahead means being efficient, handling suppliers well, methodically collecting data and monitoring performance in a way that enables you to evidence the effectiveness of your approach.

A Unified Approach

Taking a unified approach to supplier risk management in the natural resources sector offers several significant benefits:

Enhanced Visibility: Bringing together various data streams into one unified system provides greater visibility across the entire supply chain. This enables companies to have a comprehensive understanding of their suppliers, their practices, and associated risks.

Proactive Risk Identification and Mitigation: With improved visibility comes the ability to proactively identify potential risks within the supply chain. By having a holistic view of supplier performance and practices, companies can implement effective risk mitigation strategies before issues escalate, thus reducing the likelihood of disruptions.

Improved Compliance: A unified approach facilitates compliance with both internal policies and external regulations. By consolidating data and processes, companies can ensure that all suppliers adhere to required standards and regulations, reducing the risk of non-compliance and associated penalties.

Sustainable Procurement: Centralizing supplier information allows companies to evaluate supplier performance more comprehensively, including their environmental and social impact. This enables companies to make more informed decisions regarding supplier selection and procurement, favouring those suppliers that align with sustainability goals.

Operational Efficiency: By streamlining data management and supplier processes, companies can improve operational efficiency. This includes reducing manual processes, minimizing data duplication, and enabling faster decision-making, ultimately leading to cost savings and increased productivity.

Strengthened Supplier Relationships: A unified approach fosters better communication and collaboration between companies and their suppliers. By providing transparency and clarity regarding expectations and performance metrics, companies can build stronger, more sustainable relationships with their suppliers.

Strategic Alignment: Aligning risk and supplier management with overall business objectives enables companies to prioritize resources effectively. This ensures that efforts are directed towards areas that have the most significant impact on business performance and sustainability goals.

The Solution

But with many different systems to collect the myriad of supplier information across different geographies, how do you make the much-needed shift to a unified approach that will give you the information required to meet increasing demands for supply chain transparency?

Achilles steps in to simplify things. By using advanced technology, the Achilles solution can help natural resource companies to not only reduce the financial burden associated with supply chain data management but also mitigate risks stemming from compliance and operational challenges – safeguarding against potential disruptions and, also, driving competitive advantage by ensuring reliability and sustainability across your operations.

The Achilles all-in-one solution consolidates information from multiple systems to simplify supply chain management.  Through our Supply Chain Due Diligence solution we are able to identify vulnerabilities across all areas of your supply chain using supplier assessments, audits and worker interviews. Achilles also continually monitors supply chain related developments and adapts systems and processes accordingly, making it easier for you to comply with existing and emerging regulations and standards and get ahead in the market.

The Achilles approach assesses a full range of supply chain criteria including ESG using a wide range of primary and secondary data sources to enable you to evaluate suppliers more comprehensively. It also helps you make strategic decisions based on emerging trends.

The MyAchilles platform then enables you to view the outcomes of the Achilles’ rigorous supplier evaluation, supply chain risk assessment and rating process. This makes managing international supply chain risks, reporting and supplier improvement straightforward.

Contact us for Support in Navigating Supply Chain Risk Management

Contact us for Support in Navigating Supply Chain Risk Management