Why should boards care about supply chains? | Anahita Thoms, Baker McKenzie

The Better Boards Podcast Series

The topic of supply chains is on everyone's mind more than ever. Board members are increasingly obliged to ask themselves what their own company's supply chains look like, and with whom they do business. The issues associated with supply chains are complex and require consideration from multiple angles.

In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner at Better Boards, discusses supply chains with Anahita Thoms, one of the 100 Most Influential Women in German Business, according to manager magazin.

Anahita Thoms heads Baker McKenzie's International Trade Practice in Germany and is a Member of the EMEA Steering Committee for Compliance & Investigations. She is Global Lead Sustainability Partner for the Industrials, Manufacturing and Transportation Industry Group, and a Member of the ABA International Human Rights Steering Committee. She has won various accolades, including International Trade Lawyer of the Year (Germany) at the 2020 ILO Client Choice Awards, and Young Global Leader of the World Economic Forum, Capital 40 under 40.

“Board members may have had the perception that supply chain management is only a metaphor"
Anahita feels that in the past, board members may have had the perception that supply chain management is only the responsibility of those preparing the sustainability report or the procurement team. Nowadays, and in light of supply chain shortages, geopolitical challenges, and legislative developments, many boards now understand that disruptions in supply chains are a real risk, and may even become a reputational challenge.

“Supply chains are value chains are at the heart of businesses”
Businesses need to ensure that they are profitable, and supply chains are value chains at the heart of businesses, particularly those that export and import a lot of products. So, supply chain efficiency also dictates the speed at which an idea comes into the market. Altering supply chains smartly can in the long run decrease production costs as well as emissions, so the cost drivers and business impacts of each link in the supply chain need to be properly analysed.

“Directors should concentrate on exploring possibilities to diversify their supplier base and also digitalize their supply chain”
Anahita believes that, at the moment, most companies will be concerned with making their supply chains more resilient to future prices. She recommends that to increase supply chain resilience, the focus should be on exploring possibilities to diversify the supplier base and digitalize the supply chain. She recommends that smart, capable, and business-oriented Chief Sustainability Officers be enabled to set the tone from the top.

“You cannot look at these things in silos”
Anahita believes in a three-pronged approach - the business, the profitability challenges and the reputation – rather than operating in silos. She recommends rationally analysing supply chains, then looking at the values of the company and then the risks.

The three top takeaways from our conversation are:

1. Supply chains are vulnerable to disruptions. Therefore, supply chain management can be a source of risk if done badly, and it can equally be a source of great opportunity.
2. Supply chains must be understood in a more holistic manner nowadays, as sustainability in supply chains is more than just necessary, but a reputational topic.
3. Boards will play an increasing role with regards to supply chain management because they are a source of risk to the company's business.