Bill gets mixed chain reaction

Businesses could be forced to update their IT systems so they can disclose information about their supply chain operations, if a bill before Parliament is passed.

A clause added to the Companies Bill may force firms to invest in new tools to improve supply chain visibility.

While some organisations have expressed concern about potential changes, others argue that the bill will simply force firms into changes that should already be under consideration.

A Tesco spokesman says supply chain visibility is not simply about compliance, but about delivering business and health and safety benefits.

‘We have excellent visibility within the supply chain and full traceability of products back to its point of origin,’ he said.

‘Regardless of compliance issues, it is an excellent idea to know exactly where things are, because a lot of money is tied up in the supply chain.’

Whitbread Group business systems director Mark Fabes says the hospitality company has concerns about the investment it will need to make to comply with the new rules.

‘We have a fair amount of visibility in the supply chain, but the Companies Bill would require us to implement reporting tools capable of capturing data at all stages and presenting it in a simple form,’ he said.

Fabes says Whitbread will have to improve visibility across the group, because brands such as Costa Coffee, TGI Fridays and the Premier Travel Inn all have their own supply chains.

AMR Research analyst Nigel Montgomery says regardless of the regulations, companies should be pushing hard for improved visibility.

He says the biggest risk is likely to be the amount of visibility available when companies have several operating divisions or are part of a network of suppliers.

‘As more companies outsource their manufacturing and supply chain operations, the greater the risk there is of not having the necessary visibility,’ he said.

Montgomery says many firms will have to invest in master data management and install systems that collect data and provide a comprehensive collection of information across the business.

‘It could also require changes to enterprise resource planning (ERP) systems, because traditionally they do not deliver the necessary analytical data,’ he said.

Jeremy Beale, head of ebusiness at the CBI, says the organisation has major concerns about the Companies Bill.

‘Many businesses are installing systems that provide greater detail and automation, which improve transparency,’ he said.

‘But there is a difference between knowing internally what you are doing and publishing that information.’

Institute of Directors (IoD) head of corporate governance Patricia Peter says having to produce supply chain information is enough to send IT departments into a panic.

‘Many large businesses will be wondering how they can keep track of everything in the supply chain,’ she said.

Supply chain visibility...in 30 seconds

z The supply chain is the flow of resources into and out of an organisation’s operations.

z Improving supply chain visibility can deliver business, compliance and health and safety benefits. The more extensive a supply chain, the more difficult it can be for businesses to have a full view of the chain.

z A comprehensive view of operations can help businesses improve efficiency and productivity by reducing inventory, streamlining logistics and optimising the workforce.

z It can also increase profitability by providing more accurate and comprehensive information to customers, meeting delivery orders more efficiently, and ensuring essential stock is delivered in the right condition.

z Visibility of all aspects of the supply chain can also ensure businesses meet regulatory compliance, such as Sarbanes-Oxley and Basel II.

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