Ivalua: manufacturers must prioritise ESG amid challenges

Research from Ivalua has revealed 90% of businesses’ supply chains have been disrupted by inflation in the past year, due to high inflation and rising costs. 

Modern slavery cases rise when costs are high

Sapio conducted the survey, on behalf of Ivalua, asking 850 procurement leaders from across the UK, USA, Germany, France, Sweden, Netherlands and Italy.

Research found that:

• 57% of organisations have been working with cheaper suppliers due to rising costs, rather than more sustainable ones
• 35% of organisations use more local operations in their supply chain
• 49% of procurement leaders said that their organisation has been ill-equipped to deal with uncertainty

Supply chain disruption has been detrimental to efforts to improve supply chain sustainability and labour standards, especially regarding modern slavery cases, including the use of children, who are at high risk of exploitation when costs are high and cheap labour is tempting.

In 2022, there were 16,938 potential victims of modern slavery in the UK alone, an increase by 33% from the previous year.

Ensuring supply continuity and improving ESG for manufacturers

Alex Saric, Smart Procurement expert at Ivalua, shared his thoughts on upholding sustainability, exclusively with Manufacturing Digital. 

“Inflation has been a huge challenge to manufacturers in the last 12 months. It’s forced key suppliers out of business and made goods more expensive to build and ship, disrupting supply chains and pressuring margins. High inflation has also had a detrimental impact on ESG – the focus on cost-cutting and navigating market instability has resulted in a reduced focus on improving supply chain sustainability and labour standards.

“The sidelining of ESG in the face of other pressures can no longer continue, and manufacturers must ensure they learn lessons from this period of uncertainty. The biggest lesson of all should be how to enable procurement teams to manage multiple, often competing priorities in the face of dynamic market conditions. They must be able to tackle inflation, while also ensuring supply continuity, improving sustainability and identifying poor labour standards. Manufacturers should be investing in smart, collaborative, and agile technology platforms that would enable procurement teams to tackle inflation, but without limiting their ability to build strong supplier relationships and collaborate on ESG initiatives.”

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