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Can you trace your responsibilities?

By Adrian Henriques (Article 13 associate)


Part one of two

· Supply Chain,Sustainability

‘How far can you trace your responsibilities?’ is not only a difficult philosophical and moral question, it is also a practical and even a commercial one. This piece looks at why traceability matters. A subsequent piece discusses how it can be assessed.

Everything we do both relies on and sets off an endless chain of consequences. It is hard to trace the consequences of our actions very far, but in so far as we can, we are held morally accountable. And of course, we are also held accountable for what we intend to do and the consequences we try deliberately to bring about.

What has this got to do with the commercial world? Quite a lot, since the expectations of the public regarding what companies are responsible for has been rising inexorably over recent years. The expectations are driven in part by consumers, but also by environmental concerns. Companies are now expected to take responsibility not only for what they sell and the associated ‘demand chains’, but also what they buy and the associated supply chains. In short, the entire value chain is fair game.

Where the consequences are most serious, these expectations have also been codified in law. The recent Modern Slavery Act in the UK and the Dodd-Frank Act in the USA are examples. While the Acts focus on transparency, they provide a powerful incentive for companies to change their supply chain management processes.

More widely, without knowing where the parts of a product come from - and where they go after manufacture and use - it is not possible to put in place fully robust processes to determine what their impacts may be. And without that, in addition to the increase in commercial risk, corporate strategies for responding appropriately to environmental and social impact become haphazard.

Where customer health and corporate reputation are at stake, traceability is taken seriously. For example, a significant part of the fresh vegetable produce sold by supermarkets can be traced back not only to the farm where the plants were grown but sometimes to a small number of rows of plants in a particular field.

Other industries also go to great lengths to trace their products in use, especially when they are expensive. Rolls Royce knows where its thousands of engines are located at any point in time. It monitors their behaviour in real time to optimise performance. Monitoring enables early detection of potential problems, allowing prompt maintenance: aircraft engines are extremely expensive and incur great costs when they are idle or out of service. Similarly, for radioactive products, the impacts can be very severe, so tracing may go right through to ‘final’ disposal.

Unfortunately, the globalisation of world trade has compounded the problem of tracing supply and demand chains for many products. As a result, very few products or their components can in fact be traced fully to their raw material source – or to their final disposal after use. This lack of traceability exposes businesses of all kinds – from primary producers through to retailers – to compliance, reputational and financial risks.

Adrian Henriques is an independent adviser, Professor of Accountability at Middlesex University, and Associate of Article 13

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