Safer Supply: Implementation of Supply Chain Risk Management in the context of the Modern Slavery Act
Apr. 14 2020
The Modern Slavery Act 2018 (the Act) aims to combat modern slavery in the supply chains. All entities with at least AU$100 million annual consolidated revenue must comply with the Act and report their actions to assess and address modern slavery risks in their operations and supply chains.
In response to the Act’s requirements, Bureau Veritas has developed “Safer Supply”, a methodology purely based on supplier’s level of risks. When off-the-shelf solutions can cost your organisation a lot of money, our solution correlates the required actions and subsequent expenditures with the level of risks.
This is particularly important for organisations with a large number of suppliers, where not all suppliers shall be subject to the same treatment, and inherently to the same cost, based on the criticality of the supplier for the buyer, practices at the site and location of the supplier.
1. Calculate level of Risks for each supplier
The first step is to calculate the level of risks for each supplier based on 3 weighted elements:
- Country Intrinsic Risk (macro risk assessment)
- Self-Assessment Questionnaire (micro risk assessment): Each supplier is required to complete an online Self-Assessment Questionnaire (SAQ) with questions based around a number of tailored elements such as Social, Business Ethics, Health and Safety, Responsible Procurement, Environment and Sustainability, Business Performance, etc.
Note: Some questions require description of the processes in place, upload of objective evidence, certificates, etc. This SAQ will provide a score which will be weighted accordingly and integrated in the final risk rating for each supplier.
- Supplier Criticality: Score the criticality of suppliers in order to customise the supplier’s risk based on internal requirements and priorities (e.g. $ spent, reputational check, etc.).
The final risk score is a combination of the aforementioned elements.
Using the appropriate criteria for the supplier risk assessment is essential in order to allocate priorities and keep the programme within budget. All elements are fully customisable to ensure that the calculated risk is meaningful to the context of the organisation.
2. Allocating a Risk Segment and a Mitigation Strategy for each supplier
Based on final risk scoring, each supplier is allocated a risk segment – Low, Medium, High risk. A mitigation program can then be tailored to each supplier as per example below:
|Risk Segmentation||Supplier Risk Score||Risk Mitigation Plan|
|LOW||70 - 100||No Further Action|
|MEDIUM||60 - 69||Desktop Audit|
|HIGH||LESS THAN 60||On-Site Audit|
In this example, the actions taken are proportional to the supplier’s risk level (e.g. Low Risk: no actions needed, Medium Risk: desktop audit, High Risk: on-site audit). This step is also fully customisable based on the organisation’s strategy and priorities.
With Bureau Veritas’ presence in over 100 countries globally, we can mitigate costs due to physical auditing by utilising local resources. Supplier’s locations, risk profiles, audit results, findings status and any other relevant indicators can be visualised through customisable dashboards from the platform interface developed by one of our partners.
Contact us for more information on how to benefit from the full flexibility and ensure optimal cost control in your business with this solution.