COULD THIS HAPPEN TO US ?
The 1992 Cadbury Report defined corporate governance as the
system by which companies are directed and controlled . Boards of
directors are responsible for the governance of their companies .
The board ’ s actions are subject to laws and regulation and include :
• setting the company ’ s strategic aims • providing the leadership to put them into effect • supervising the management of the business • reporting to shareholders on their stewardship .
• This governance and oversight responsibility clearly extends to supplier management and relations . When it falls short , it can have
disastrous results . One has to look no further than the recent Gulf of
Mexico oil disaster or the UK horse meat scandal .
The question that chief executives and their board colleagues
should be asking themselves is simple : could this happen to us ? As
stewards of their companies ’ values and leaders of their business
decisions , senior executives must assure themselves that they have
a firm grasp of both how they treat their suppliers and how their
suppliers behave if they are to be confident in their overall corporate
governance position .
Best practice : Chris Thomson , head of category management
andstrategic sourcing at State of Flux
Understanding which areas of governance and which risks to focus
your attention and resources on is key . Leading organisations
segment their supplier base according to multiple criteria ( see
page104 of the 2014 SRM report ) and conduct segmentation at least
annually .
The output of this segmentation creates a tiering of suppliers ,
typically into four groups : strategic , preferred , approved and tactical .
Different supplier management strategies , process approaches and
resources ( including respective roles and responsibilities ) can be
applied to each of the different groups .
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