What supply chain dashboards leave out

A supply chain dashboard can show inventory, freight delays and supplier concentration. It cannot measure trust.

“No dashboard measures trust and no audit catches the strength of a relationship,” says Miriana Stephens MInstD, Deputy Chair of Wakatū Incorporation.

Stephens begins her assessment of supply chain resilience well before products reach a port. She focuses first on whenua, water, biodiversity, people, mātauranga and the relationships connecting them.

“Ports, shipping containers and logistics are almost the end of the story,” she says. “If those things aren’t resilient, eventually your supply chain won’t be either.”

Stephens joined Sydney-based Florence Van Dyke, Executive Director of Canbury, and Hong Kong-based governance and sustainable investment specialist Agnes K Y Tai for a Chapter Zero New Zealand webinar, delivered with Climate Governance Initiative Hong Kong and facilitated by Judene Edgar MNZM, CMInstD.

Van Dyke says one of the most important suppliers is also one of the least likely to appear on a dashboard.

“Nature is our most valuable supplier, but very rarely measured. Water, healthy soil, pollination and forests underpin huge parts of our economy, particularly in New Zealand.

“Nature will eventually send an invoice, whether through depleted fish stocks, declining crop yields, water scarcity or the loss of pollination.” 

Moving products or creating value

Wakatū works to a 500-year intergenerational vision. That time horizon changes the questions put before its governors.

Rather than asking only whether a supply chain can withstand disruption, Stephens asks whether decisions will create enduring value.

“Supply chains move products, but value chains create, protect and should share value,” she says.

That distinction informs Wakatū’s development of indigenous ingredients and natural health products. Biodiversity, science, regulation, traditional knowledge, market access and commercialisation are considered together from the outset.

“A supply chain typically asks, how do we move products?” Stephens says. “A value chain asks who creates the value, who holds the rights and responsibilities, and how do you ensure the value is shared fairly?”

Wakatū is working with traditional Chinese medicine organisations, but Stephens says those relationships are not simply a route to customers. They provide insight into how potential partners make decisions, assess quality and establish trust.

“Trade agreements may open doors, but relationships create enduring trade.”

The price of an empty shelf

Van Dyke sees the financial trade-offs through her role with beverage producer Chia Sisters.

The company carries more stock of important inputs than a conventional lean manufacturing model would suggest. That ties up cash and increases holding costs, but retailers place considerable weight on continuity.

“If your product doesn’t show up, if it’s not on the shelf, it’s going to be replaced by a competitor,” she says.

Pandemic disruption pushed many businesses from just-in-time supply towards just-in-case planning. Geopolitical instability, extreme weather and freight uncertainty have made a full return to earlier assumptions difficult.

Additional inventory, spare capacity and supplier diversity all carry costs, requiring boards to decide where resilience investments are justified and whether exposure to disruption has been consciously chosen.

Overseas customers are also changing the calculation.

Many New Zealand exporters sit outside international reporting and due diligence regimes, but their customers do not. Large buyers may require information about traceability, emissions, labour practices and environmental impacts because they need it to meet their own obligations.

Van Dyke says exporters need to understand where they sit in a customer’s supply chain and which regulations apply to that customer. A New Zealand company may not be directly in scope, but its buyer may still require the information needed to meet overseas standards.

“Consumers, investors and buyers aren’t looking for perfection,” she says. “What they are looking for is honesty.”

For premium food and beverage businesses, that transparency extends beyond what happens inside the factory to the origins of ingredients, packaging and energy.

Tai says supply chain due diligence and disclosure requirements vary across New Zealand’s major trading partners, including China, the United States, Australia, Japan and South Korea. She points, in particular, to China’s eco-environmental code, which she says is given specific reference in its Human Rights Action Plan.

Risks do not remain separate

Environmental, social and commercial risks are often managed by different teams. The events creating them are usually connected.

Van Dyke gives the example of drought in an agricultural region. Lower yields reduce supply, affect water availability and can reduce employment in surrounding communities.

She also warns about a “mitigation trap”. A business may change suppliers quickly to escape a climate-related risk, only to inherit higher air-freight emissions, weaker labour protections or poorer outcomes for Indigenous owners.

“You might look like you’ve solved the problem when you’re analysing it in a silo,” she says. “But when you look at the big picture, it hasn’t actually supported the value chain.”

Van Dyke says many organisations understand their impacts on nature better than they understand their dependence on it.

Through her work at Canbury, Van Dyke says she is seeing stronger interest in nature analysis from companies in Australia and Asia than in Aotearoa New Zealand. Unlike much of the work on climate, she says that interest is not necessarily being driven by reporting requirements.

“Companies are undertaking it internally because they want to understand where their businesses depend on nature, where the risks sit and what that could mean financially.”

That dependence extends across the global economy. A 2020 World Economic Forum report estimated that more than half of the world’s GDP was moderately or highly dependent on nature and its services, leaving much of that economic activity exposed to risks from nature loss.

The same report noted about 25% of assessed plant and animal species were threatened by human actions, with one million species facing extinction, many within decades.

Looking beneath the data

Tai says directors need to test how supply chain information was produced, not simply receive it.

“How far down the supply chain does it go? Is it tier one only, or tier two? Who verifies it? What methodologies are being used?”

Boards should know whether management is relying on industry averages or proxies, which assumptions sit beneath the figures and whether the information is current enough to support decisions.

“Data should be comprehensive, up to date and comparable – and tell us your assumptions,” Tai says.

Different physical climate-risk models can produce markedly different assessments of future exposure, with implications for lending, insurance and asset values. A polished report may still create false confidence if it covers only direct suppliers, relies on old estimates or excludes the parts of the value chain where the greatest exposure sits.

Stephens does not discount the value of reliable information. She questions what it can capture on its own.

“Data can give us confidence at a point in time, but relationships give us confidence over time.”

Wakatū’s investment in leadership, knowledge, science, regulatory capability and trusted partnerships does not always produce immediate financial returns. Stephens says it reduces future risk and supports long-term value.

“Resilient supply chains don’t begin with logistics. They begin with healthy ecosystems, trusted relationships, the protection of knowledge, capable people and strong governance.

“Resilience isn’t something you build when disruption arrives. It’s something you invest in long before it’s needed.”

Tai says resilience ultimately requires boards to make choices about the disruption they are prepared to carry.

“Supply chain resilience is not just about monitoring risks. It is about boards making deliberate, transparent choices about how much disruption they are willing to carry in pursuit of value and market access.”

She says boards should also consider which suppliers are already aligned with the organisation, which can be brought into alignment and how they can help move the wider supply chain ecosystem towards long-term value.