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SIMSA Audit Software

About

SIMSA is an integrated Audit Management Platform based on the PDCA (Plan-Do-Check-Act) framework of operational excellence. It cuts out the bureaucratic layers of reviewers & approvers, therefore quick to deploy and intuitive to use. Its simplicity and mobility feature is the key factor for the buy-in from the operational staff. It can be used for self-assessments and tracking of corrective actions.

Tag: Environment

ESMS

Environment and Social Management System: Enhancing Supply Chain Sustainability

Introduction

In today’s globalized world, supply chains play a crucial role in the success and reputation of businesses. With increasing awareness about environmental and social responsibility, companies are realizing the importance of integrating an effective Environment and Social Management System (ESMS) into their supply chain management practices. ESMS helps organizations identify, manage, and mitigate environmental and social risks, ensuring sustainable operations and positive impacts on communities and stakeholders.

Importance of ESMS in Supply Chain Management

Integrating an Environment and Social Management System (ESMS) into supply chain management is of utmost importance for businesses in today’s socially and environmentally conscious landscape. ESMS ensures that companies consider and address the environmental and social impacts of their supply chain activities, leading to several significant benefits.

Firstly, ESMS helps companies identify and mitigate environmental and social risks throughout their supply chains. By conducting thorough assessments and evaluations, organizations can proactively identify potential issues and implement measures to minimize their negative impacts. This proactive approach not only safeguards the environment but also protects the well-being of communities and stakeholders involved in the supply chain.

Secondly, implementing ESMS promotes sustainability and responsible practices. By setting clear goals and targets for sustainable operations, companies can optimize resource utilization, reduce waste generation, and minimize pollution. This not only reduces the ecological footprint but also leads to cost savings and operational efficiencies in the long run.

Thirdly, ESMS enhances brand reputation and stakeholder trust. In an era where consumers and investors increasingly prioritize ethical and sustainable business practices, companies that demonstrate their commitment to environmental and social responsibility gain a competitive edge. By integrating ESMS into supply chain management, companies can strengthen stakeholder relationships, attract socially conscious customers, and access new markets that value sustainability.

Furthermore, ESMS fosters transparency and accountability. Through regular reporting and monitoring, companies can track their environmental and social performance, identify areas for improvement, and demonstrate compliance with relevant regulations and industry standards. This transparency builds trust with stakeholders and allows for effective communication of sustainability efforts.

Pillars of ESMS

ESMS Pillars
1. Policy

A strong foundation for any ESMS lies in the development and implementation of a comprehensive policy. This policy outlines the organization’s commitment to environmental and social responsibility, setting the tone for sustainable practices throughout the supply chain. It should align with international standards and best practices, and clearly define the company’s goals, objectives, and strategies for managing environmental and social impacts.

2. Identification of Risks & Impacts

Understanding the potential risks and impacts on the environment and society is crucial for effective ESMS implementation. This involves conducting thorough assessments and evaluations to identify potential environmental and social risks associated with the supply chain activities. By analyzing the entire lifecycle of products and services, companies can identify areas where they can minimize their ecological footprint and enhance social well-being.

3. Management Program

A robust management program forms the core of ESMS implementation. It includes the development of strategies, procedures, and guidelines for addressing identified risks and impacts. This program establishes a structured approach to resource management, waste reduction, pollution prevention, and social engagement. By integrating sustainable practices into daily operations, organizations can optimize resource utilization, minimize environmental harm, and foster positive social outcomes.

4. Organization

Successful implementation of ESMS requires a dedicated team and well-defined roles and responsibilities. Organizations need to designate individuals responsible for overseeing and managing environmental and social aspects within the supply chain. This ensures accountability and facilitates effective coordination across different departments and stakeholders. Regular training and capacity-building initiatives should also be provided to empower employees and foster a culture of sustainability.

5. Emergency Preparedness

Preparedness for environmental emergencies is a critical aspect of ESMS. Organizations must develop contingency plans and response mechanisms to handle unforeseen events such as natural disasters or industrial accidents. By having robust emergency preparedness protocols in place, companies can minimize the negative impacts on the environment and local communities, while ensuring the safety of their workforce.

6. Stakeholder Engagement

Engaging with stakeholders, including local communities, NGOs, suppliers, and customers, is vital for the success of ESMS. Companies should establish regular communication channels and consultation processes to gather feedback, address concerns, and incorporate diverse perspectives. By actively involving stakeholders in decision-making processes, organizations can build trust, enhance transparency, and create shared value.

7. Grievance Handling

ESMS implementation should include a mechanism for addressing grievances raised by stakeholders. Companies should establish a clear and transparent process for receiving, investigating, and resolving complaints related to environmental and social issues. Promptly addressing grievances not only demonstrates a commitment to accountability but also provides an opportunity for continuous improvement and strengthening of relationships with stakeholders.

8. Reporting and Monitoring & Review

To track progress and ensure the effectiveness of ESMS, regular monitoring, reporting, and review mechanisms should be established. Companies should define key performance indicators (KPIs) and implement systems to collect relevant data. Periodic assessments and audits help identify areas for improvement, measure the achievement of goals, and facilitate informed decision-making. Transparent reporting on environmental and social performance promotes accountability and facilitates benchmarking against industry standards.

The Role of Leadership in ESMS Implementation

Successful implementation of ESMS requires strong leadership commitment. Top management must champion sustainability as a core value and integrate it into the organization’s culture.

Top management should actively participate in setting the strategic direction for ESMS and allocate adequate resources to support its implementation. They should lead by example and promote a culture of sustainability throughout the organization.

Leadership plays a crucial role in driving change and inspiring employees to embrace sustainable practices. By effectively communicating the importance of ESMS and its benefits, leaders can foster a sense of ownership and engagement among employees. They should encourage innovation and provide necessary training and guidance to ensure that everyone understands their roles and responsibilities in achieving sustainability goals.

Furthermore, leaders should regularly review and evaluate the progress of ESMS implementation. They should monitor key performance indicators, assess the effectiveness of initiatives, and make necessary adjustments to enhance performance. By demonstrating their commitment to continuous improvement, leaders can motivate employees and create a culture of accountability and excellence.

Partnership Between Companies in the Supply Chain

Collaboration and partnership between companies within the supply chain are vital for effective Environment and Social Management System implementation. When companies work together, they can share knowledge, resources, and best practices, leading to collective improvement in environmental and social performance.

The partnership enables companies to align their sustainability goals and coordinate efforts to address common challenges. By collaborating on initiatives such as responsible sourcing, waste management, and community engagement, companies can leverage their collective influence to drive positive change.

Sharing best practices and lessons learned fosters innovation and encourages the adoption of more sustainable approaches. Through collaboration, companies can identify and implement cutting-edge technologies, processes, and policies that have a positive impact on the environment and society.

Moreover, partnership enhances trust and transparency within the supply chain. By openly sharing information on environmental and social performance, companies can build strong relationships based on mutual respect and shared values. This transparency extends to stakeholders, including customers, investors, and communities, who increasingly expect companies to demonstrate responsible supply chain practices.

SIMSA Operational Audits

Conclusion

In an era where sustainability and social responsibility are paramount, integrating an effective Environment and Social Management System (ESMS) is crucial for companies seeking to enhance their supply chain management practices. By embracing the pillars of ESMS – including policy development, risk identification, management programs, stakeholder engagement, and reporting – companies can minimize environmental and social risks, drive positive change, and create long-term value.

Leadership commitment, resource allocation, and continuous monitoring are vital for successful ESMS implementation. Additionally, collaboration and partnership between companies in the supply chain foster knowledge sharing, innovation, and collective improvement in sustainability practices.

Embracing ESMS not only aligns businesses with global standards and best practices but also enhances their reputation, fosters stakeholder trust, and contributes to a more sustainable future.

How Safe & Secure are your Warehouse Operations?

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Warehouses are no longer old dilapidated buildings in dingy lanes, conventionally used for the storage purpose. Warehouse Operations today are part of optimal flow of goods, have increasing levels of complexity & automation, and play a strategic role in fulfilment of customer demand. Increasingly, warehousing operation is encompassing activities like postponement, packing, light manufacturing, sortation, cross-docking , reverse logistics, after sales service, orders fulfilment etc. Also, with use of information technology and automation, the need for the skilled manpower has gone up, which is not easy to find.

The increased level of warehouse complexity and activity also means more exposure to various kinds of risks. Though there are no statistics available for country-wide warehouse incidents but one could assess the gravity of the situation from news reports, while a majority of incidents are not reported. Unfortunately, barring few industries that are quite sensitive to risks across supply chain, most of the companies leave the risks management to their 3PL or don't bother at all. Few 3PLs put in place some common and basic safety & security procedures in place but is it what is needed for effective risks management?

Warehouse Safety

Image: Fire incident in a warehouse in Delhi on Oct 6, 2020 (Image Source: ANI)

Let's first understand what risks warehouses are exposed to. The risks span from Safety, Security, Quality, Service, Regulatory, Legal, Financial, Environmental etc. The risk profile of a warehouse is determined by 3 major factors:

  1. Selection and location of a Warehouse: The risks associated with quality of building construction and quality of construction material used, cannot be easily identified and mitigated. The flooding of the surrounding area and seepage of water from the walls, flooring are the most commonly found issues in a warehouse. The problems get compounded with extreme weather events & intensity of rainfall. What was built for normal weather may not sustain under extreme weather events. The water drainage from roof gutters or stormwater drain may lead to water flooding & seepage. The warehouse situated in the cyclone prone area should have cyclone resistant design & construction. The same holds true for the strength, joints & quality of flooring, quality of electrical wiring & fixtures, fire control system etc. From the location perspective one needs to assess legal & regulatory compliance, potential of political interference, security environment, proximity from the fire station & hospital etc. Once a warehouse facility is decided, the associated risks are fixed during the period of occupancy, which are hard to mitigate. Therefore, a thorough due diligence and SIMSA automated audit workflowusing an exhaustive & standard checklist is a must before zeroing on the location & type of facility.
  2.  Warehouse Layout, Fixtures & Equipment: Starting with the external flow of vehicles in the warehouse, space for parking of vehicles, designing of internal flow of people & equipment, providing enough space for various activities to prevent crowding go a long way in preventing major accidents. Putting up the right fixtures and using MHE based on the load requirement, built-in safety features and their regular maintenance determine the levels of risks. The warehouse layout & design would not only determine the safety, security hazards but also the productivity & turnaround time. If you are going for ready to use warehouse facility, it makes sense to use a checklist based assessment to compare various options.
  3.  Warehouse Operations: The third category of risks emanate from how the warehouse operations are organised and managed. While organising the warehouse operations, one must take into account the risks carried forward from the first two categories i.e. the location & facility selection and layout, fixture & equipment. The risks associated with the warehouse operations are:
    • Health & Safety
    • Security
    • Financial
    • Regulatory Compliance
    • Quality & Service
    • Environment

With most of the warehousing operations being outsourced, the companies have a little visibility & control over the operations. Many companies have basic Standard Operating Procedures documents, which most of the time never referred to or updates. Some of these documents are so textual that it makes a good bed-time reading. Most of the supervisors and other people managing the operations may not have even seen these documents ever. Moreover, every site may have different risk profiles. How can one standard document serve the purpose of each site?

So people take short-cuts, especially during month-ends pressure and then slowly it creeps as the bad practice until it snowballs into a big incident. Until then, it is optimism bias that prevails, "it won't happen to us".

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Optimism bias, "it won't happen to us" and leaving risks management to your 3rd party logistics provider or contract manufacturers are the biggest risks to your operations. The risks management should start on the day, you decide to build or outsource a warehouse.

Approach to handle Warehouse Risks

Risks management is a three level approach i.e. Strategic, Tactical and Operational.

  1. Strategic Level: Whether it's a green field or a brown field project, detailed risks assessment has to be an integral part of the project. To re-emphasise, the risks accepted at this stage cannot be mitigated easily. It requires a team of people from engineering, operations IT, legal compliance to visit sites to assess risks from various angles. This could be a burden on the company's resources and also many companies many not have that expertise in-house. A better alternative is to take the services of experts in this field. It should not be seen as a cost but an investment to prevent any unforeseen risk that may cost multiple times the fees of hiring the expert.
  2. Tactical Level: Before start of any operations, a thorough risk assessment must be done and corresponding internal controls should be implemented. For example, a company instituted a procedure for authorisation by the warehouse manager, if any operator has to work at more than 6 feet from the ground level. The authorisation is nothing but a checklist of do's & don'ts to be explained to the operator before starting the work.

    But then how do you ensure whether the controls are effective and are being implemented in spirit and not just on papers. Internal audit is one of the most tested techniques in proactively identifying the gaps in controls. The audits are effective if:

    • Aligned to the risks identified for a site and operation.
    • Done periodically, rather than just once a year activity. The practice of monthly self-audits on high risk areas, followed by the quarterly more detailed audits by a 3rd party covering all the risk areas.
    • Corrective and Preventive action planning, with accountability, visibility and tracking of the closure in a time-bound manner.

    It may appear an additional work, but not investing time and resources on this aspect of risk management may cost dearly. It's easier to cure a cancer if identified much early, through periodic check-up. It may also sound daunting to manage the entire planning and managing the data as well as tracking corrective actions.

    A platform like SIMSA, that is based on the operational excellence framework of Plan, Do, Check & Act, not only automates entire audit workflow but also ensures complete visibility & control over risks & corrective actions.

  3.  Operational Level: It is at this level at which the controls are executed on day to day basis. It is best to automate the controls and workflows, so that the dependence on the people is minimised. As the technology is becoming affordable, the use IoT and Cameras with Analytics could be the of immense use not only to identify risks on real time basis but also help in predicting future risks. Instead of asking the warehouse manager to report a small fire incident, it may be automated using the sensors. Even in the absence of the advanced technology, simple workflow tools can be used to facilitate the implementation of checklists & reporting of events, instead of using excel sheets or emails.
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SIMSA Operational Audits
Conclusion

Warehouses will increasingly play a much larger, complex and strategic roles in the supply chain. Therefore, the risks associated will also be much higher. The risks have to be managed at Strategic, Tactical and Operational levels. Use of information technology can facilitate the effective management of the warehousing risks. It's high time that companies start thinking in this direction and shed the optimism bias or dependence on 3PLs for risks management.