Managing Supply Chain Risk and the Standards Making Process

1. Managing Supply Chain Risk and the Standards Making Process

2. Who is BSI? • By Royal Charter – focused on the development of standards, training and certification activities designed to Improve performance, manage risk , reduce cost and enable sustainable growth • Leading Global Standards Creation Body: British, European, ISO, Public and Private Standards • Global Network: 70,000clients in 150countries • Experienced: The world’s first National Standards Body established in 1901 • Thought Leaders: Founding member of ISO and shaped the world’s most adopted standards, incl. ISO 9001, 14001, 18001, Information Security, Business Continuity, Energy Management, FSCC 22000 • Trusted: We’re a Royal Charter Company, reinvesting profits back into our business to keep business relevant – Improve performance, reduce cost, ensure sustainability.

3. A truly global brand and network – trusted and recognized • Clients in 150 countries • 65 offices worldwide • 3 regional hubs: • UK • US • Hong Kong • Global key account management • Facilitating governance, risk & compliance • Certifying and verifying global suppliers • Stimulating international trade

4. Reputational Risk - Hidden Supplier Risk A Social, Quality, Environmental and Security Challenge

6. Everybody is talking about it

7. The Challenge: Hidden Supplier Risks Many Supply Chain Black Holes What You Don’t See – You Don’t Know What You Don’t Know – You Can’t Manage

8. Reputational Risks FOOD FRAUD WORKPLACE CONDITIONS COUNTERFEIT PRODUCTS POLLUTION WATER RESOURCES & CHEMICAL WASTE SECURITY & CUSTOMS FOOD SAFETY

9. Environmental & Social Challenges

10. World Population growth will magnify the challenge

11. 1 Billion Global Carrying Capacity – the planet can support 4 Billion 14 Billion

12. Increasing Supply Chain Complexity • The World’s Largest Shoemaker doesn’t actually make shoes, but only designs and sells • The World’s Largest Personal Computer Direct seller doesn’t manufacture its products but assembles them from components sourced elsewhere • The World’s largest beverage manufacturer has an outsourced manufacturing franchise model

13. Your REPUTATION is of Executives say a strong corporate brand is just as important as strong product brand 87% of consumers avoid buying a product if they don’t like or trust the company behind the product 70% of a company’s market value is attributable to its brand reputation your 60% Source Weber Shandwick 2012The Company behind the Brand: In Reputation We Trust

14. Understanding your hidden supply chain risk is critical to protecting your brand. • Supplier traceability leads to improved ability to manage risk • Better alignment of values with entire supply chain stakeholder • Land usage, pastoral practices, worker ethics and OHS • Animal husbandry, breeding and temperament • Animal welfare and religious issues need to be defined • Acclimatization, feeding, transportation • Post shipment management, husbandry, feeding and slaughtering • Chain of custody – supplier pre-qualification and approval will be critical to ensure supply chain integrity Protecting Brand, Business & Livelihood

15. Standards and Standards making processStandards as knowledge

16. Standards are not regulations

17. Examples of where Standards have worked well and not worked well BS EN ISO/IEC 7810:1996 Physical Characteristics of Identification Cards Lack of Standardization

18. Remember - Standards are knowledge

19. Types of Standards High Low Int’l Standards (e.g. ISO 22000) European Standards (EN) Australian Standards (AS 5812) Time Control Publicly Available Specifications (e.g. PAS 220, 223) Private Standards (e.g. BRC, SQF, WQA) Corporate Technical Specifications (e.g. Coles, ALDI) High Low

20. Standards Development BSI works with organisations to develop standards needed in order to: Fix specific problems faced by that organisation or Industry Fill a gap – no standards currently exist or in development. We do this by: Advising the stakeholders on their specific industry challenges Focused on the needs of the sponsoring organisation or industry associations Controlled by the BSI guidelines to ensure credibility

21. Project Scope How does it work? Launch Finalise Standard Scope Finalize Draft • Review Panel • Wider/public consultation independently facilitated by BSI. The review group may include: • Formal standards committees • Government departments • Trade associations • Technical Experts • Other industry stakeholders • Consumer groups Drafting Publication Domain Research & Content Generation Steering Group: 5 – 8 key stakeholders in the subject area, usually identified by the client Train Technical Experts

22. Carbon reduction project (Taiwan Environment Agency) • Need: Increase awareness over carbon neutrality / Embed best Patrice within Taiwan Industry • Project: Revision of International Carbon Neutrality PAS • Benefits: • Consistent approach to carbons management • Soft touch regulation • International recognition for Taiwan EPA in carbon sector

23. Reputation Risk: Blood diamond • Issue:Exposure to ethical issue and quality issues • Project:Traceability in supply chain • Establish a standard methodology for assurance of traceability in the supply chain • Train suppliers and vendors along the supply chain on new standard • Benefits:Brand protection; underpin brand strategy & product mark; reputation

24. Process consistency: Customer service (AIR CHINA) Issue: After multiple acquisitions, Air China needed support to design and implement a new Customer Support Management System (CSMS). Their challenge was defining. Project:Create private standards covering customer management internal best practice and ensuring commitment with the proposed process Benefit: Customer service process consistent over the seven new air-china sites

25. Alternative to regulation – Food Industry

26. Examples for Primary Industry

27. Supply Chain stakeholder engagement Land Usage Sustainability Development & Commercialisation of new technology Origin Traceability Animal Welfare Food-Agri Sector Water Management Chemical Usage Farm Employees OHS & Social Biodiversity Energy Management Community sustainable development

28. Hope is not a method Needs a strategy Strategy does not happen without Governance Governance does not happen without Ethics Ethics does not happen without stakeholder engagement Sustainability TomorrowDon’t leave it to chance

29. Key take away • The meaning of quality has a new definition • Supply chains are becoming more complex with increasing risk • Traceability, visibility and transparency of supply chains will be critical • Regulations are not the only means to push industry good practices • Voluntary standardization is a key driver in most developed countries, the market makes the good practices compulsory not government • Governments & Industry Associations call regularly on BSI to test their Industry • Organization can benefit / demonstrate leadership using standardization as a means of defining what good looks like in shaping their business model and protecting their brand • Be in a position where you are able to tell your supply chain story or someone else will