Thursday, August 22, 2019

How to create responsible supply chains in the age of globalization 4.0

Jul 10. 2019
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By Suphachai Chearavanont
Chief Executive Officer, CP Group
Special to The Nation

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Every company, government and individual, regardless of where they are based, is completely dependent on global value chains that seamlessly deliver goods and services around the world.

Global supply chains touch the lives of so many businesses, farmers and consumers that as well as being efficient and effective, it is just as important that they are responsible and accountable. That means making sure that global supply chains play a role in mitigating environmental and social problems to make sure that they benefit everyone throughout the value chain.

Here in the Asia region, on top of infrastructure-related challenges and the need to navigate complex political, trade and economic policies, global supply chains also involve many socio-economic and environmental challenges. Plastic pollution is a major issue, with five countries in the region contributing more plastic waste to the ocean than the rest of the world.

Rampant air and water pollution make Asian cities some of the most polluted places in the world, placing many of these cities at risk of extreme weather patterns and rising sea levels. Modern-day slavery still affects global supply chains, impacting more than 40 million people, two-thirds of them based in Asia.

Tackling plastics packaging, waste management, climate change management, and labour rights are important priorities. But given the complexity of global supply chains, these are also complicated issues to tackle for companies. To add to existing challenges, the global population is projected to reach 9 billion and the United Nations Food and Agriculture Organisation predicts that global food production must increase by 60 per cent by 2050. This increase in demand will drive drastic increases in food production that will lead to further challenges over water supply, land use, deforestation and biodiversity. Balancing these demands requires a strong commitment towards full traceability and transparency in supply chains.

Our view is that we can help bring more transparency to global supply chains through public-private partnerships, leveraging innovation and digitization and training our people and suppliers. Through these three channels, we believe companies can work alongside governments and NGOs to be part of the solution to many of the problems that global supply chains currently face.

Firstly, we strongly believe that some of the environmental and labour challenges mentioned earlier cannot be easily solved by one company or country alone and requires global public-private partnerships. This is the motivation for CP Group to spearhead the United Nations’ Global Compact Network Thailand, to push forward a programme around human rights, labour, environment and anti-corruption. This network has grown throughout the year and now features 40 companies in Thailand, working together with the government to promote the implementation of the UN Guiding Principles on Business and Human Rights in businesses through peer learning, dialogue and training. 

In promoting more sustainable practices in the seafood industry, we have seen the impact of the Seafood Taskforce, an alliance of leading retailers from the US and the European Union, Thai seafood producers, and independent international organisations to develop and encourage traceability systems and fair labour practices throughout the seafood supply chain. To tackle the issue of overfishing, we have also seen the value of the Thai Sustainable Fisheries Roundtable, which brings together fisheries industry associations, the Sustainable Fisheries Partnership and the World Wildlife Fund for Nature, Thailand to develop more sustainable fishing practices in the Gulf of Thailand and the Andaman Sea.

Secondly, technology, digitization and innovation can also be a strong force in bringing more traceability throughout global supply chains. We have witnessed the enormous positive impact of integrating advanced technology such as robotics, real-time monitoring and sensors to help make our chicken and egg farms, integrated swine farms and production facilities more hygienic and more environmentally friendly.

Satellite systems help farmers better locate suitable arable land for farming, internet of things (IoT) helps irrigation systems better manage water utilisation while blockchain brings transparency into supply chains by enabling buyers and sellers to trace goods throughout the production process. Continuous research and development in satellite technology, biotechnology, nanotech and robotics has also shown that technology, when properly deployed, can have an enormous impact on helping us better understand animal diseases, epidemiology and the life cycle of commodities to ensure that our farms are more productive while being more sustainable.

Lastly, training and engaging employees and all stakeholders throughout the supply chain plays an important role in making sure responsible principles are adopted throughout the value chain. We have seen how important it is to engage young leaders and that is why we train our own people to be champions of sustainability and then empower them to bring that knowledge and purpose back to the various parts of our business. We have established the C.P. Leadership Institute, which trains young executives each year in management but also the values of social responsibility. We involve them in hands-on projects that expose them to new ways of thinking as well as to better understand the social impact of our business. It is just as important to take into consideration the latest trends of innovators, disruptors and our next generation of employees and consumers to better understand how companies can better cater to their needs and to adapt to the Fourth industrial Revolution.

Companies can be a force for good in global supply chains, if we do our part to forge effective partnerships, leverage digitization and technology and make sure we listen to our stakeholders. I believe that companies need to play a role in promoting sustainable supply chains but we need to make a business case for responsible supply chains, which means incentivising farmers and suppliers to be more responsible suppliers and encouraging companies throughout our own supply chains to pursue greener and more accountable practices. It is by working together that we can make a difference.

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