Ten Ways To Mitigate Supply Chain Risk in 2021

07 January 2021

CHAS, the supply chain risk management expert, highlights ten ways to mitigate supply chain risk in 2021.

The Contractors Health and Safety Assessment Scheme (CHAS) is the leading provider of risk prevention, compliance and supply chain management services for clients and contractors. Since 1997, CHAS has been helping to improve health and safety standards across the UK and safeguard organisations from risk.

1. Be Ready for Brexit Deadlines

Anyone settled in the UK for more than five years as of exit day (31 January, 2020) is likely to be able to gain ‘settled status’ which will grant them the same rights as British citizens but they only have until 30 June 2021 to apply.

There are concerns that language barriers and a lack of awareness of the need to apply may prevent some workers from completing the application. A sudden exodus of staff could compromise health & safety and business continuity so businesses should ensure everyone in their supply chain is aware of the need to apply for ‘settled status’ and offer assistance where required. The application can be accessed here.

2. Prepare for IR35 Changes

Delayed IR35 changes, which govern whether an individual working as a contractor or freelancer ought to be deemed an employee on payroll for taxation purposes, are due to go ahead in April 2021.

The changes mean medium and large businesses will be responsible for determining whether IR35 applies and could face financial penalties for non-compliance. Companies who haven’t done so already should audit their current contractor base and determine who falls inside and outside of IR35 using the HMRC’s CEST tool.

Once businesses have determined where IR35 applies they should communicate with existing contractors and put processes in place to determine if the off-payroll rules apply to future engagements.

3. Familiarise Yourself With Tougher Payment Rules

From April 2021, contractors bidding for Government contracts above £5m per annum will need to be able to pay at least 85 per cent of invoices to their supply chain in 60 days and have an action plan for how they will pay 95 per cent in 60 days. Contractors who fail to meet these requirements may be suspended from winning any further government contracts until their payment performance improves. 

4. Check Your Supply Chain is COVID-Secure

Coronavirus vaccination developments are good news but they are not a quick fix; businesses will need to continue to manage the risk of coronavirus in 2021. This includes checking the issue is being taken seriously throughout the supply chain and looking for evidence that contractors are committed to COVID-secure practices.

Anyone who regularly employs contractors can access a database of companies who have completed a COVID-secure Statement of Best Practice for no charge via CHAS’s free Client Portal.

5. Refocus on Health & Safety

Coronavirus has been a significant distraction in 2020 so it can be beneficial to reinforce expectations around health & safety, particularly if you have been diversifying your supply chain.

It’s crucial to ensure all contractors understand their obligations around health & safety and have the correct management systems in place. The easiest way to do this is to choose a contractor who has been accredited by a third party assessor. CHAS’s free Client Portal provides access to a database of accredited contractors who meet a wide range of health & safety assessment criteria.

6. Control Carbon

Sustainability is rising rapidly up the construction industry’s agenda with many companies making public commitments to accelerating their journey towards carbon neutrality and asking their supply chains to do the same.

It is becoming commonplace for businesses of all sizes to track their carbon use via tools such as CHAS Plant, which monitors all of the plant being used on a site and helps meet regulatory obligations like Non-road mobile machinery (NRMM).

Many businesses are also embracing circularity, which involves eliminating waste and finding ways to continually use resources. For more on building a circular economy implementation plan see Circulytics, a free digital measuring tool from the Ellen MacArthur Foundation.

7. Know Your Workforce

Knowing workers’ identity before they are allowed on-site and being confident that they are qualified and have the right to work can help prevent illegal working, manage health and safety risks, and ensure supply chain security.

Consider whether your current workforce credential management processes are comprehensive enough. Are you confident of everyone’s identity on your site, their right to work, and their competence? Systems such as CHAS People which streamline workforce credential management can reduce risk, save time and money and simplify the entire compliance process.

8. Consider Your Social Impact

Put simply, social impact is the potential for positive or negative impacts on wider society or individual people.  All businesses create social impact through their supply chains, and in our ever more connected world, these impacts can be both local and global and present risks to businesses.

Social impacts risks can occur across a range of issues including: health and safety; human rights and modern slavery; equality, diversity and inclusion of all; and positive impacts by providing decent employment and training opportunities.

Businesses should assess their business for risks related to these impact areas and ensure that if any negative impacts are found then steps are taken to address these. Some of these areas are covered by active legislation in the UK including the Equality Act 2010 and the Modern Slavery Act 2015.

Assessing and managing risk should be both an aspect of legal compliance for your business, but also a part of being an ethical and responsible business too.

9. Prevent Bribery & Corruption

The Bribery Act will be ten years old in June 2021, yet many companies are still unaware of their obligations around the prevention of bribery and corruption. Under the Bribery Act 2010, if you can’t prove that you have adequate procedures in place to combat corruption, you’re guilty of failing to prevent bribery and you can face unlimited fines. 

The Ministry of Justice (MoJ) has published six principles for bribery prevention that are a useful focus for organisations of any size to follow for bribery prevention, these include: Proportionate procedures; Top-level commitment; Risk-assessment; Due-diligence (including training) and Monitoring and review.

10. Don’t Go It Alone

With an increasing number of issues to get a measure of managing every aspect of supply chain risk management in-house can be a daunting task, especially when you are managing multiple contractors. It’s also unnecessary as help is freely available. For example, if you regularly hire contractors you can become a CHAS Client for absolutely no cost which gives you access to a database of contractors who meet a wide range of assessment criteria, including a growing number who have completed the new Common Assessment Standard, which is fast becoming the gold standard for prequalification in the construction industry. CHAS Clients also benefit from a number of other business services including contractor-matching, contractor engagement and a risk management dashboard. 

Picture: a graphic showing several cogs, showing the words “risk management”

Article written by Ella Tansley | Published 07 January 2021

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