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Innovations in Third Party Management: Supply Wisdom

Published October 14, 2022

Written by: Future of Sourcing Awards
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Future of Sourcing Awards

The 2023 Future of Sourcing Awards recognizes organizations and individuals that show innovation, leadership and transformation in categories that are critical to the sourcing industry. The Awards will take place on October 18, 2023, the capstone evening at the SIG Global Executive Summit. Attendees will enjoy dinner, networking and an awards ceremony that brings together some of the brightest minds to create a truly remarkable experience.

 

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Can you outline why your team embarked on this project and the problem that needed to be solved?

Project: Supply Wisdom ESG 
Since our launch in 2017 as a full-spectrum continuous risk monitoring solution, we have continually enhanced our framework to ensure that it aligns with changing market and client needs. In early 2021, increased attention by the new administration, regulators, consumers, and employees to ESG sparked the idea to leverage our existing capabilities to create a continuous ESG risk product with real-time ESG intelligence on third parties and locations. 
 
When we polled sourcing and risk leaders to understand their ESG needs, they let us know that they didn’t see solutions in the market that could provide a current view of their suppliers’ or supply chains’ ESG health. They also lacked visibility into how changes in the ESG risk landscape could impact their organizations. We evaluated the prevailing solutions in the market and concluded that none of them were meeting the need for current and comprehensive ESG intelligence.     
 

How were things done originally and what was the inspiration to innovate the process?

ESG solutions that existed in the market consisted of supplier assessments that are very lengthy, labor-intensive, and expensive. These surveys take a considerable time for the suppliers to complete and return and then create a massive burden to validate, review and analyze. In today’s dynamic ESG risk landscape, data collected at a point in time is quickly stale. The shortcomings of these solutions were crippling efforts to efficiently manage ESG risk.  
 
While both Supply Wisdom’s third-party and location frameworks have always included ESG-related metrics, these metrics were distributed across our framework within multiple different risk domains. Therefore, even though our clients had access to our real-time ESG data, our previous framework did not provide them with a clear and comprehensive view of the ESG risks in their supply chains. They were missing a consolidated view of their suppliers and supply chain ESG status. 
 
Forthcoming ESG disclosure rules will require enterprises to assess and publicly report on their supply and supply chain performance around ESG. Enterprises need to understand the ESG compliance and reputation risks associated with their suppliers and the locations in which they and their suppliers operate. The market need for this transparency of supply chain ESG health/risks and our unique capabilities to provide that transparency were the main drivers for this project. 
 
 

What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)

Outcomes were measured in terms of customer satisfaction and feedback which has been extremely positive. Important evaluation criteria for our customers included:   
  • Timeliness: With Supply Wisdom ESG, they now have instant access to always current ESG risk intelligence vs. quickly stale data from point-in-time ESG questionnaires  
  • Efficiency: With Supply Wisdom ESG, they now have instant access to an accurate and consolidated view of their supply chain’s ESG status vs. a burden to validate, review, analyze, and consolidate questionnaire responses 
  • Comprehensiveness: With Supply Wisdom ESG, they now have instant access to full-spectrum leading standards-based supplier and location ESG coverage vs. limited supplier ESG scope  
 
 

How do you plan to ensure that the new model remains relevant and adapts to the future needs of the market?

We have a dedicated team responsible for continually monitoring new and emerging ESG standards and reporting requirements both domestically and abroad. As new standards and requirements emerge, they will be evaluated and incorporated via agile sprints to enhance our ESG framework. As an example, we are currently monitoring the IFRS sustainability reporting standards as they are in the process of expanding their ESG framework. 
 
A dedicated product team not only participates in technology forums but also works with numerous technology partners to ensure the rapid adoption of new technological innovations. Our product management and leadership teams actively participate in sourcing, risk, and compliance industry groups to ensure they have a pulse on market needs in this area.  In fact, one such initiative founded and supported by Supply Wisdom, the Risk Board, was recently included on Fast Company’s Fourth Annual List of the Best Workplaces for Innovators as an Enterprise Category Standout. The Risk Board is a peer-to-peer risk management collaboration organization that allows for cross-industry collaboration and the exchange of best risk management practices.
 

What advice do you have for those who may want to implement this innovative approach in their own organizations?

ESG is fast becoming a critical criterion for evaluating suppliers. As the first line of defense, Procurement can play a critical role in ensuring adherence to good ESG practices and mitigation of ESG-related reputation risks in a company’s supply chain. The right ESG solution can enable companies to understand the current ESG health and risk status of any supplier or location at any point in the sourcing lifecycle from sourcing strategy and due diligence to ongoing vendor management and governance. Evaluation criteria for an ESG intelligence and monitoring solution should include: 
  • Timeliness – real-time intelligence vs. point-in-time, questionnaire-based solution 
  • Efficiency – instantly accessible always-current, accurate, and consolidated view of ESG status vs. a burden on internal teams to validate and consolidate 
  • Comprehensiveness – full-spectrum, leading standards-based ESG supplier and location coverage vs. limited supplier scope 
 

How did your team assess the risks/potential for your third party management strategy?

To assess the risk for this project’s strategy we considered three factors – availability of ESG data, the market demand for an ESG service, and finally any technology and people resourcing needed to accomplish the project.   
 
In the development stages of our comprehensive ESG framework, we leveraged publicly available leading ESG frameworks including UN Global Compact, GRI, WEF, ILO, ISO, and TCFD. We also received feedback on our preliminary ESG framework from leaders in compliance, sustainability, and corporate social responsibility programs. Additionally, we presented our ESG framework to procurement and risk leaders to ensure that the final version met their need for ESG transparency for their suppliers and in their supply chains.

 

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