Michiko Shima of BSI describes strategies and tools for improving the management of food supply chains to enhance their resilience and sustainability.
Corporate Social Responsibility (CSR)
Child labour, forced labour, human trafficking, unsafe and hazardous working conditions, inadequate labour protection, ecosystem degradation, habitat destruction and land disputes all represent undesirable impacts of industrial activity. Companies in every sector, including food businesses, are under increasing pressure to be transparent about how they mitigate potential social and environmental impacts and risks in their supply chains. With regulations, such as the United Kingdom’s Modern Slavery Act of 2015 and the California Transparency in Supply Chains Act of 2010, companies are increasingly being asked to be more transparent about the risks and impacts of their activities and their efforts to address such risks in their supply chains. Many companies, while well intentioned, struggle to identify and understand their supply chains, exposing themselves to criticism that they are not adequately managing the embedded social and environmental risks. The news media and nongovernmental organisations have reported cases of environmental damage, poor working conditions and child and forced labour where agricultural commodities are grown and harvested as well as where fish are caught and processed. Sustainable food supply chains need to address these social and environmental issues within their complex structures. Food supply chains need to address three key challenges: social issues, environmental issues and complexity. Each challenge is briefly described below.
Companies in every sector, including food businesses,are under increasing pressure to be transparent about how they mitigate potential social and environmental impacts and risks in their supply chains.
Social issues
Workers subject to the worst labour conditions, such as forced labour and child labour, are typically nearer the start of the supply chain. These conditions exist because the countries where food ingredients are harvested and processed have inadequate or unenforced laws, regulations and judicial systems or because farms and processing facilities require seasonal unskilled labour. Many of these temporary workers are contracted through brokers, preventing companies from understanding exactly how they are hired. Such low-wage and unskilled labour is sometimes taken advantage of because these workers do not understand the terms and conditions of their contract and do not know their rights.
Environmental issues
Given that farms and plantations are typically in rural areas, their practices are more likely to negatively impact biodiversity or ecological services. These negative impacts can be from the encroachment of farms and plantations or due to the use of pesticide and fertiliser and are often found upstream of the supply chain making them difficult to identify. In fisheries, fish stock and ocean ecosystems are also impacted.
Supply chain complexity
When companies map out the suppliers in their food value chains, they begin to understand the complexity of multi-tier supply systems. For example, agricultural products may be purchased directly from one single farmer locally, imported from multiple farmers overseas, or purchased through intermediaries (e.g. cooperatives, traders). When processed inputs are purchased, a very different type of worksite (processor) is incorporated into the food chain and these can exist at various points along the value chains. In addition, most food products are not made from a single ingredient so that the complexity is multiplied by the number of ingredients in the end product. When a product is touched by many parties and combined with other ingredients, companies may find it difficult to identify their suppliers and determine where to target their efforts and resources to develop sustainable supply chains.
Effective supply chain management
For a company’s supply chains to be sustainable and resilient, the supply chain management must be: focused on suppliers at risk, efficient in the allocation of resources and efforts, in control of the supply chain activities and influential over suppliers.
Be focused
Companies with a large supplier base are often overwhelmed by the complexity of managing their supply chains. A company needs to determine where and how to place its resources across a number of key inputs and a range of suppliers in multiple tiers in order to maximise its risk mitigation. The right intelligence and systematic approaches can help the company focus and prioritise its efforts.
For example, many of the largest producing countries of common agricultural products, such as bananas, beans, cocoa, coffee, palm oil and sugar, are known to have poor working conditions (Table 1). With intelligence, a company can identify, for example, that its sugar comes from Brazil. Given that Brazil is a high risk country for poor working conditions, the company may decide to further inquire with the suppliers about working conditions within the sugar processing plants. Even if commodities are imported from countries that are not in Table 1, they may still represent high environmental and social risks.
![]()
Table 1: Largest Producers of Selected Commodities in 2013 (Countries in red are rated high or severe regarding poor working conditions, per BSI SCREEN)
Supplier management software, like BSI’s supplier compliance manager (SCM), can overlay countrybased intelligence, such as the poor working conditions and child labour indexes, onto supplier-specific information. When individual supplier information is put in context, a company can visualise the supplier location and concentration within its supplier base in relation to the relevant risks in order to determine where resources should be focused to optimise risk mitigation. For example, a company will likely focus its resources on a larger number of suppliers located in higher risk countries than on a few suppliers in a country with relatively low risks (Figure 1).
![]()
Figure 1 - Sample Supplier Management Software SCM
Well-designed, responsible sourcing programmes allow companies to gather and analyse information efficiently.
Be efficient
Being located in a country associated with poor working conditions does not mean that a particular supplier has poor working conditions. To clarify the situation, a company may, for example, request specific information from a supplier with regards to its labour practices and related social impacts. Companies may send self-assessment questionnaires to a subset of suppliers or all suppliers. This process requires companies to manage the information flows and the data collected in order to understand their risks and make better decisions about their sourcing practices.
Well-designed, responsible sourcing programmes allow companies to gather and analyse information efficiently. For example, supplier compliance software can store all the information in one place allowing a company to:
- compare the suppliers based on the key indicators,
- incorporate its own risk tolerance and importance criteria,
- track and monitor the status in its supply chain management process.
A company can communicate with its suppliers about the selfassessment requests or follow-ups (i.e. corrective actions) through an automated email notification system. Onsite visits or verification audits can be scheduled and also tracked in the system. These efficiency gains can free the sourcing staff from the repetitive and time-consuming information gathering, analysis and communications, allowing the staff to spend time and effort on working with high-risk, but critical, suppliers.
Be in control
To make the supply chains more visible, companies need to map out the suppliers and select some for audits, unless all suppliers can be easily audited. When companies are overwhelmed with a large supplier base, they tend to choose suppliers for audits based on the availability of information and/or the existing supplier relationship (i.e. Random Approach in Figure 2). In this case, companies are not in control of their supply chain management as the decisions are driven by the lack of information or the ease of request (i.e. known suppliers) and not by the imminent risks. Using a systematic method for identifying the risks, companies can not only reduce the number of onsite visits or verification audits, and thus the costs associated with supply chain monitoring activities, but also minimise the chances of overlooking the high-risk suppliers or issues (i.e. Risk Based Approach in Figure 2). With a well-designed sourcing policy and a systematic risk-based supply chain management approach, companies can stay on top of the supply chain risks and mitigations.
![]()
Figure 2 - Risk Based Sustainable Supply Chain Management
Be influential
Automated supply chain systems allow the identification, analysis, tracking, communication and monitoring of the supply chain management process. The right tools and intelligence can encourage companies to target and conduct site audits of risky or critical suppliers in order to improve their visibility in their supply chains. These audits result in corrective and preventative actions for suppliers to implement. However, it is not always easy to influence supplier practices.
Implementation of corrective actions depends on the supplier, issues and market conditions, among many other variables. This may require identification and creation of right incentives, partnership with other organisations - ranging from NGOs to competitors - to increase the leverage, or simply improvements in communication skills. Companies may need to align their own internal interests and incentives to promote a cohesive approach to suppliers.
Actions to overcome the implementation challenges may not be straight forward from the audit results; solutions often need to be tailored. External experts, working with farmers, processors and other entities to implement environmental and social improvements, can be involved. Bringing in a third party also provides fresh and objective approaches. Companies operating globally need to tap into local resources that understand local cultures, laws and customs as well as international experience of supporting organisations to better manage supply chain risks.
Even companies with the strongest due diligence practices can be subject to an unexpected incident.
Holistic approach
A holistic approach to supply chain risk management is necessary to enhance supply chain resilience. A company must have clear policies and strategies to guide its activities:
- implement a systematic approach to identify and analyse relevant risks in accordance with its own tolerance levels,
- monitor its supply chain management process and track supplier performance,
- incorporate strategies to work with suppliers.
By understanding its risks, addressing high-risk areas and preparing for the worst case scenarios, a company is ready to face the unexpected when it happens.
Even companies with the strongest due diligence practices can be subject to an unexpected incident or disclosure relating to a commodity or region from which they source. A company may react hastily if it does not know whether its suppliers are associated with, for example, a claim that slave labour is being used in agriculture in a specific state of Brazil (Figure 3). The company may take its own resources away from other productive tasks to defend or fight against the allegations or public campaigns or switch suppliers causing supply chain disruptions.
![]()
Figure 3 - Hotspots for slave labour in agricultural sector in Rondonia, Brazil
Michiko Shima is a Supply Chain Corporate Social Responsibility Advisor at British Standards Institution (BSI) Tel: +1-703-674-1800 Email: michiko.shima@bsigroup.com Web: bsi-supplychainsolutions.com BSI takes a holistic approach to supply chain management to improve resilience. It uses an automated system for storing, tracking, monitoring and managing self- and second/ third party assessments, complemented by a global network of auditors.
