|Tracking Corporate Social Responsibility with ERP Software|
In 2010, the International Organisation for Standardization (ISO) introduced an international standard that outlines regulations for corporate social responsibility. Among the issues of focus are: human rights, labour relations, the environment, and corruption.
Good ERP software should be able to track applicants, even before they are hired, and continue documenting compliance for future evaluation. Furthermore, the ERP system should have risk management functionality that identifies risks and manages the creation of risk mitigation plans.
For labour and human rights, ERP software should document employee age in order to comply with child labour laws and also document labour management practices by keeping record of the training and skill set of each employee from the time they are hired.
Regarding the environment, ERP software should include a built-in module for environmental footprint management. It should be able to capture data over the life cycle of a product, tracking its impact on the environment. Corruption prevention in ERP software should provide vendor evaluation that requires segregation of duties, preventing any single person from approving a vendor, reducing the likelihood of partnering with corrupt suppliers. ERP software will not do everything to solve CSR issues, but with necessary documentation and tracking systems, it can make the HR job of complying with CSR standards much easier and more efficient. With these new standards in mind, now is a good time to compare ERP software on the market and make an informed decision.
Manufacturers are increasingly turning to IT to help manage their corporate social responsibility (CSR) programs. Organisations have identified a need to integrate and automate their CSR processes and information. Organisations are getting limited value from their ERP systems to help them manage their CSR programs, and are looking to their ERP vendors for solutions.
An internal control system based on a pre-existing ERP framework can centralize the information you need to manage CSR activities within any functional area (finance, HR, supply chain management, manufacturing) and across your enterprise. Four areas to focus:
- Documentation. A central repository of all governance, risk management and compliance related documents that is accessible to auditors and managers, and where documents can be updated as close to real time as possible.
- Testing. Tracking testing activities, including what was tested, when and by whom, results and remedial actions when testing failed.
- User interface. To communicate all key information to the appropriate audiences through an intuitive, secure, role-based, user-defined portal.
- Monitoring. Enabling organizations to manage key events/transactions within their ERP and other business applications and present any significant or material events to the appropriate audience.
Customer and regulatory requirements often steer sustainability initiatives. There is an increasing number of companies noticing that they frequently result in decreased operating costs and increased revenues. Also, the ethical aspect is becoming more critical as the end customer wants to be able to resonate with a brand or company about what they’re using and how.
ERP systems can support the sustainability strategy positively in many ways.
- By providing the right organisational environment in which to adopt a sustainability strategy
- Supply measuring and monitoring tools to capture consumption data. Also, exploding material and overhead costs and dashboards to publish and share this data for all to use
- Giving specific sustainability-focused tools to reduce adverse impact. Asset Management, Product Lifecycle Management or Supply Chain Optimisation modules, for example.
Product development is driving this way as ERP vendors see sustainability as a significant trend for organisations. There are schemes in place to help businesses be accountable for their carbon footprint – Carbon Trust or Enworks, for example. However, these tend to ignore the role of ERP systems in both supporting and measuring reductions & ROIs achieved.