A solution for Boohoo’s Supply Chain issues

Procurement, SUPPLY CHAIN, Best Practice, Boohoo
Blogs, Top Resources, Best Practice Article, Best Practice

If you work in procurement or supply chain, you are probably very familiar with the story of Boohoo and issues with their supply chain concerned with working conditions and payments below minimum wage. An Independent Review following an article published in the Financial Times in July was conducted. The full report can be found here.

The purpose of this article is to summarise some of the findings and recommendations from the review, and highlight how our Supplier Information Management (SIM Dojo) and our new Supplier Relationship Management (SRM Dojo) products could help Boohoo, immediately. In fact, if anyone from Boohoo reads this, we could have this system in place for you within a couple of days.

What were the recommendations/Actions?

 

1 – Reduce approved supplier numbers

Boohoo had somewhere in the region of 8,000 suppliers. The recommendation was to reduce the number of companies to a more manageable figure, and specifically look to reduce the number of sub-contracting companies.

How can SIM Dojo help?

Almost all of our clients will ask the question to their suppliers as to if they will be using a 3rd party to deliver the goods or services. If the answer is yes, this opens up a larger set of questions to drill into more detail around the Tier 2 suppliers, modern-day slavery act questions and more. (Note, it’s much easier to build this dynamic nature into a tool, than using Excel).

I’d recommend that all of Boohoo’s suppliers are invited to complete their onboarding process, starting with their most important suppliers in the first tranche, or looking at suppliers to who you’ve made payments within the last 12 months. You will naturally see a rationalisation of the supply base from those who do not complete the onboarding process.

Top tip: Ensure that the suppliers have to be approved before they can receive payment.

2 – Publish a list of Tier 1 suppliers and Tier 2 subcontractors

The report recommended that Boohoo publish this information within 6 months. It would be interesting to understand how new supplier information is captured at Boohoo, and how they intend to produce this segmentation report;

How can SIM Dojo help?

A – Categorising suppliers – our custom field functionality means that suppliers can be tagged and reported against. I would recommend when a new supplier is invited to go through onboarding, they are assigned the tag or Tier 1 or 2. All of this information can then be used for future reporting.

B – Publishing all supplier information – the system will create a centralised database for all suppliers, as well as provide an overview of where they are in the onboarding process. It will reduce the time taken to onboard and chase suppliers who are not responding via automated notifications.

3 – Boohoo brand buyers can only buy from approved suppliers

Using manual processes such as email and Excel offers zero visibility to the organisation as to where a supplier is in the onboarding process, whether that is the supplier completing information or internal approvals.

How can SIM Dojo help?

A – Approval workflows – we have a sophisticated approval workflow process built into the tool. This means that the necessary people are notified when they need to approve. All approval steps create an audited record. When all approvals steps have been completed, the supplier can then be fully approved. This will make it clear and obvious where suppliers are in the onboarding process, and if they’re approved

B – The approval process can be automated depending on the supplier’s profile. For example, Tier 1 and Tier 2 suppliers can have different approval workflows, and the system can be configured in such a way that the correct approval process is chosen automatically. It can even be more granular than this and be set up so different categories, regions and risks can have different approval workflows.

4 – Implement an electronic supply chain audit programme

Once the supplier information is in a good place and the relevant processes are in place, it becomes much easier to start managing the suppliers and the activities associated with that supplier.

How can SRM Dojo help?

The supplier database integrates with SRM Dojo to allow organisations to create and track tasks, activities, and log meeting notes. It would be very easy to set future tasks associated with audits, receive a notification when this is due, and upload the completed audit against the relevant supplier.

Conclusion

 

Getting a handle on the visibility of the supply chain starts with good processes and technology can be a great facilitator in that. Unfortunately for Boohoo, it seems like they were aware of the issues within their supply chain and didn’t act upon it.

As you read this, can you confidently say that you have good visibility and processes for your supplier approvals. For example, could you identify all suppliers with up to date insurance certifications, know by category which suppliers are using subcontractors, which suppliers have a Modern Say Slavery Act, could you demonstrate to the auditors when and who approved a supplier? If not, SIM Dojo could start giving you peace of mind in a matter of days.

Our tools have been used by many clients to better understand their supply chains and develop risk mitigation for Covid-19 and Brexit. Give us a call or drop us an email to info@marketdojo.com.

December 18, 2020

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