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Supply Chain Transformation After a Crisis

APICS CEO

Friday April 27, 2018


I recently had the opportunity to write a brief response to The Financial Times about what a supply chain transformation entails. The response accompanied a large feature on the status of seafood conglomerate Thai Union, which faced a crisis in 2015 when the Associated Press published a description of Thailand seafood suppliers’ use of child and slave labor. Thai Union, which owns Chicken of the Seas in the U.S., Mareblue in Italy and Petit Navire in France, was a major customer of the corrupt seafood suppliers.

“The report, which went on to win a Pulitzer Prize, found migrant workers from Myanmar, many of them children, working long hours for minimal pay in filthy and cramped conditions to pay down debt to labour brokers,” John Reed writes for The Financial Times.

Immediately, Thai Union — the world’s largest canned tuna producer — heard from its biggest customers, including Costco and Walmart in the United States and Tesco and J Sainsbury in the United Kingdom. Thiraphong Chansiri, Thai Union’s president and CEO, pledged to lead the seafood and fishing industry into sustainability.

At the time, Greenpeace had already criticized Thai Union and other producers for their overfishing, harm to marine life and worker exploitation. “Mr. Chansiri, a second-generation family CEO, says the crisis made him take critics seriously, and put sustainability at the core of the strategy of the company his father founded more than 40 years ago,” Reed writes.

After the public relations crisis with its supply chain, Thai Union had to work quickly. It voided its contracts with all its shrimp producers and brought the process inside. It created codes of conduct and sustainability plans, complete with goals, for itself and its suppliers. The company also reviewed its extensive supply chain, identified areas that needed to change and created an auditing process. Lastly, Thai Union was the first Thai seafood company to eliminate the charge paid by migrants to intermediaries or corrupt government officials – a charge that created forced labor in the first place.

The company’s commitment must continue, however. It is working to underscore the traceability of all its tuna and on the working conditions on its fishing boats. Plus, Thai Union signed an agreement with Greenpeace that promises to eliminate exploitative and unsustainable practices from its supply chain. 

Thai Union has grown from a $1 million business when it was founded in 1977 to 2017 revenues of about $4.5 billion. Chansiri reports that the company’s culture changes have started to generate profits as well. “Sustainability and innovation became part of our business strategy,” Chansiri says in the article. “Because of the effort we have made so far, I want to turn it into a positive element for the company that differentiates us from the others in the industry.”

Supply chain transparency

If your supply chain lacks transparency, don’t wait for a crisis to motivate change. Get started immediately. As I said in my response in The Financial Times, overhauling a supply chain can help businesses raise their overall value. Consider how Chansiri described sustainability and innovation as critical to Thai Union’s overall strategy. Now think about how essential supply chain is to the success of that strategy.

At APICS, we seek to help professionals and businesses maximize supply chain impact. While APICS is known for its supply chain education and certifications, it is offering more tools aimed at helping businesses. For example, benchmarking enables organizations to measure their supply chain performance against industry peers. The process empowers business leaders to assess their current supply chain performance and implement an improvement plan. This tool is a unique benefit of APICS corporate membership. Learn more about how the APICS SCORmark benchmark tool can help your organization improve its supply chain performance.

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