“A sustainable supply chain reflects the firm’s ability to plan for, mitigate, detect, respond to, and recover from likely risks.” This article was written to provide supply chain professionals with a few key concepts that management may need to support the building of sustainable supply chains. Briefly covered are: 1) The linking of compliance to performance standards to supply chain collaboration is a critical operational goal; 2) Risk management and continual improvement lie at the heart of effective supply chain monitoring and mitigation; 3) Monitoring compliance is a complex operational issue but one with proven methodologies for implementation; and, 4) Compliance to standards of performance and supply chain collaboration can save more than it costs.

1. A Sustainable Supply Chain: Four Things to Explain to Management
Omar Keith Helferich, PhD & John E Griggs, PhD
Supply Chain Sustainability LLC
Being Succinct Can Help When Explaining Complex Concepts
Succinctly stated, “A sustainable supply chain reflects the firm’s ability to plan for, mitigate, detect, respond
to, and recover from likely risks.”i
One way to gain the support needed to maintain a sustainable supply chain is to ensure that corporate
management understands four important supply chain concepts:
1. The linking of compliance to performance standards to supply chain collaboration is a critical
operational goal.
2. Risk management and continual improvement lie at the heart of effective supply chain monitoring and
mitigation.
3. Monitoring compliance is a complex operational issue but one with proven methodologies for
implementation.
4. Compliance to standards of performance and supply chain collaboration can save more than it costs.
Each of these four concepts is briefly presented below: Compliance to Standards of Performance; Concepts of
Process Improvement; Monitoring Performance; and Benefits of Continual Improvement.
Compliance to Standards of Performance - A Goal
Supply chain professionals embrace a policy of compliance to standards because to do so is consistent with
their goal of improving performance though best practice strategies and the improved operational efficiency
and effectiveness of their supply chains.
Our four-year focus on supply chain security-brand
protectionii- has led us to three simple conclusions: 1) the
concepts of risk analysis and continual improvement will lie
at the core of any meaningful supply chain performance
improvement; 2) the concepts of “compliance” and
“collaboration” merge when we define and attempt to
adhere to standards of supply chain performance; and, 3) it is
proven fact that process improvements lead to increased
profit and corporate resiliency. The connecting of
Figure 1: The Connecting of Compliance and Collaboration
“compliance to standards” and “supply chain collaboration”
as we envision it is shown in Figure 1, The Connecting of Compliance and Collaboration.

2. A Sustainable Supply Chain: Four Things to Explain to Management
The Underlying Concepts of Processes Improvement Standards
Risk Analysis and Continual Improvement are the two core concepts which underpin all internationally-
recognized standards… whether called performance standards or compliance standards. Understanding these
two concepts is critical in addressing the issues of supply chain risk.
Risk Analysis
There are various models used to represent the “Risk Management Process”. All include the two fundamental
attributes of the probability (likelihood) of an event occurrence and the impact (consequence) potential of the
occurrence.
With roots dating back to the late-50s and used primarily within the food and pharmaceutical industries, one
such risk model is Hazard Analysis of Critical Control Points (HACCP)iii.
The basic principles of HACCP are:
 Principle 1: Conduct Hazard Analysis
 Principle 2: Identify Critical Control Points (CCP)
 Principle 3: Establish Critical Limits for Each CCP
 Principle 4: Establish CCP Monitoring Requirements
 Principle 5: Establish Corrective Actions
 Principle 6: Establish Record Keeping Procedures
 Principle 7: Monitor HACCP System Performance
ISO 31000, Risk Management – Principles and Guidelines (ISO 31000) iv and ISO 28000, Security
Management Systems for the Supply Chain (ISO-28000)v defines a risk management framework as a set of
components that provide the foundations and organizational arrangements for designing, implementing,
monitoring, reviewing and continually improving risk management throughout the organization.
ISO 31000 uses the following definitions of risk, definitions which are consistent with definitions used in
numerous other risk analysis approaches:
 Risk: Effect of uncertainty on objectives
 Level of Risk: Magnitude of a risk, or combination of risks, expressed in terms of the
combination of consequences and their likelihood
 Consequence: Outcome of an event affecting objectives
 Likelihood: Chance of something happening
In practice, there are tools that can be useful in assessing and managing supply chain risks including;
failure modes and effects analysis, CARVER-Shock, scenario analysis, simulation, economic models, and
stochastic analytical models. vi
What is relevant is not which risk analysis approach is best suited for a particular industry or supply chain
focus; what is relevant is that all international standards and all emerging industry or aspect standards will
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3. A Sustainable Supply Chain: Four Things to Explain to Management
have “risk analysis” as a core and underlying concept.
Continual Improvement
The second core concept is “Continual
Improvement”; a concept that is also common
across all major existing and emerging standards of
performance.
Not intended as a history lesson, but to establish its
relevance and staying power, Figure 2: The Continual
Improvement Timeline, traces currently used concepts
back to Frances Bacon. Bacon’s scientific method is
referred to as "hypothesis (Plan)", "experiment" (Do)–
"evaluation" (Check)”. Shewhart defined this as his
cycle of continual improvement, which was later
modified and used by Deming and, many say, used in
the development of Six Sigma
Figure 2: The Continual Improvement Timeline
From a supply chain risk perspective, the importance of continual improvement is made very clear by the side-
by-side comparison of ISO 31000’s and Shewhart’s PDCAA view of the concept of continual improvement
shown in Figure 3, ISO 31000 and PDCAA. All relevant international standards and all emerging industry or
aspect standards will have “continual improvement” as a core and underlying concept.
Commitment Commitment
Plan the Risk Management Plan
Framework
Continually Improve Implement Risk Act Do
the Risk Framework Management
vement
Monitor & Review the Check & Analyze
Risk Framework
ISO 31000, Risk Management Shewert’s PDCAA
Figure 3: Continual Improvement - ISO 31000 and PDCAA
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4. A Sustainable Supply Chain: Four Things to Explain to Management
Define and Adhere to Performance Standards
Complexity
The International Organization for Standardization (ISO) has
developed over 18,500 International Standards on a variety of
subjects and some 1,100 new ISO standards are published
every year.
Figure 4, Key Word Search of ISO Standards, shows the count
of published and under development standards reported from
ISO’s website using terms of relevance to supply chain
professionals. Even allowing for overlap and standards that
are not relevant to various organizations it is a daunting list.
ISO publishes: non-certifiable standards (e.g. ISO 31000:2000,
Risk Management and ISO 26000, Social Responsibility);
certifiable standards by sector (e.g. ISO 22000, Food Safety);
and, certifiable standards by aspect (e.g. ISO 28000, Supply
Chain Security).
Figure 4: Key Word Search of ISO Standards
There are: guidelines (e.g. Asia-Pacific Economic Cooperation
(APEC) Private Sector Supply Chain Security Guidelines); self-assessment Programs (e.g. BIS Compliance
Criteria: Export Management and Compliance Program); benchmarking tools (Michigan State University and
University of Minnesota, Food supply Chain security); and, government compliance requirements (e.g. C-TPAT
Minimal Security Criteria).
What is important to keep in mind is that overtime and if the standards survive, they all take on the same
general approach and much of the same concepts and content. An example of interest is to compare the
content evolution of the 11 C-TPAT nodal minimum security criteria requirements and the content of the
recent C-TPAT best practice study; it is clear to us that C-TPAT will continue, by design or not, its evolution
toward an ISO-like standard.
If you must develop a corporate-specific standard of performance for, as an example, suppliers, then it makes
logical sense to pattern it after a formal standard.
The Monitoring Process
To balance the complexity, we need to focus on basic commonality.
To which we would add a fourth… the monitoring process.
No standard, guideline, check-list, self-assessment, or compliance criteria require that an independent 3rd-
party audit firm be retained to audit compliance to a standard. This is obviously the case when a standard is
defined as “non-certifiable”; it is the case in all published ISO standards and other industry standards as well.
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5. A Sustainable Supply Chain: Four Things to Explain to Management
We will not make a case for or against
certification to a standard by an
accredited certification body.
But, as an example, if an organization
wishes to internalize (or outsource)
the process for implementing and
monitoring a supplier compliance
process, there is no need to reinvent
the wheel. The model for such an
application can be taken directly from
that used by the auditors themselves,
which is illustrated in Figure 5, A Basic
Compliance Monitoring Process.
The relevance to us is that a working
model of what and how to do it exists
Figure 5: A Basic Compliance Monitoring Process
and implemented versions are
managing millions of “compliance audits” per year.
The Benefits of Continual Process Improvement
Requesting funding to plan a response to plan for an earthquake, followed by a tsunami, followed by nuclear
reactor failures would not have been successful. Nor, most likely, would funding be secured by the threat of
non-quantifiable consequence to unlikely events. Most organizations seem to have a high tolerance for risk.
So, a suggestion is to embrace the policy
compliance to standards as your idea and
“sell” the concept on the basis of
increased profit, reduced risk, and
improved mitigation of the damage
caused by the occurrence of planned for
or unforeseen events
Examples of research results include: 1)
Improved product safety and a 38%
reduction in theft/loss/pilferage; 2)
Improved supply chain visibility and a 50%
increase in access to supply chain data as Figure 6: The Proven Benefits of Process Improvements
well as a 30% increase in timeliness of
shipping information; 3) Resilience and a 30% reduction in problem identification time, response time to
problems, and in problem resolution time.
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6. A Sustainable Supply Chain: Four Things to Explain to Management
The outcomes presented in Figure 6: The Proven Benefits of Process Improvement are consistent with the
experience that supply chain reengineering initiatives can achieve.vii Process improvement lies at the heart of
building a more cost-effective and resilient supply chain. One can take the perspective that compliance to
standards imposed by external organizations is a waste of time and resources or one can take the perspective
that the organization will, for any number of reasons, seek compliance and it should be embraced and viewed
in the context we understand – continual improvement in the supply chain.
Summary
To repeat, we believe:
1. Linking of compliance to performance standards and supply chain collaboration is a critical operational
goal.
2. Risk management and continual improvement lie at the heart of effective supply chain monitoring and
mitigation.
3. Monitoring compliance is a complex operational issue but one with proven methodologies for implementation.
4. Compliance to standards of performance and supply chain collaboration can save more than it costs; a belief
shared with other supply chain professionals and proven by research.
Whether or not you agree with our basic beliefs, perhaps we can all agree that we need to gain management
understanding and support by a refocus on basic issues… starting from the perspective of brand protection
and increased profit… embracing - not downplaying - the complexity of a global supply chain… focusing on,
understanding, and leveraging the underlying elements of risk analysis and continual improvement…
understanding the overlaps and directions of “guidelines, checklists, best practices, and standards”… designing
compliance requirements that are corporately-relevant and externally-usable… conforming to a proven
process of monitoring compliance to standards.
A big challenge, but supply chain professionals are used to that.
i
Bowersox, Donald J., David J. Closs, and M. Bixby Cooper, Supply Chain Logistics Management, McGraw-Hill Irwin, Third Edition, 2010. Chapter 17.
ii
Michigan State University (MSU) and Griggs and Associates LLC conducted its Department of Homeland Security (DHS) sponsored research on
global food supply chain security from 2004 through 2007 under a grant awarded by the National Center for Food Protection and Defense (NCFPD).
NCFPD is a DHS Center of Excellence lead by the University of Minnesota. The MSU research study was supported by the U.S. Department of
Homeland Security (Grant number N-00014-04-1-0659), through a grant awarded to the National Center for Food Protection and Defense at the
University of Minnesota. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author (s) and do
not represent the policy or position of the Department of Homeland Security.
iii
Hazard Analysis & Critical Control Points (HACCP). HACCP is a management system in which food safety is addressed through the analysis and
control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and
consumption of the finished product. US Food and Drug Administration.
iv
ISO 31000 Risk Management- Principles and Guidelines, www.ISO.org, International Organization for Standardization.
v
ISO 28000 Specifications for Security Management Systems for the Supply Chain. www.ISO.org, International Organization for Standardization.
vi
Research by Authors for American Red Cross and DHS, and Zsidisin George A. and Bob Ritchie, Supply Chain Risk- A Handbook of Assessment,
Management, and Performance, Springer, 2008.
vii
Supply chain reengineering projects and research by the authors and supporting university research.; Helferich, Omar Keith and Robert Cook,
Securing the Supply Chain, Council of Logistics Management, 2002.
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