Exporters must take holistic approach to supply chain health

Tech May 16, 2014 00:00

By Varunee Ratchatapattanakul

9,231 Viewed

Given the current political climate in Thailand, it would be understandable if Thai companies hesitated to make any major moves in 2014. Given the uncertainty, it might seem practical to adopta wait and see approach to many aspects of business.

However, we must all recognize that despite challenges at home, the rest of the world moves on.  And this means that to avoid challenges abroad, we must maintain clean supply chains here in Thailand.
Today, various stakeholders – consumers, customers, shareholders, boards, employees, governments,NGOs – are questioning companies up and down supply chains about the sources of their goods and asking them about their performance in areas beyond profit and loss.
As a result of this scrutiny, companiesincreasingly confront mounting pressure to conduct business in a transparentand sustainable manner that is fair for society.
Companies today face a host of questions about their ethics: Are goods made with fair labor practices?Are products safe for consumers?Are goods made in a “green manner?  Is there compliance with local and international laws?
And now the list of questions is growing to include queries about intellectual property rights.  Are companies – and especially exporters – compliant with laws on the use of licensed software in producing, designing and marketing goods?  Are manufacturers using pirated software instead of licensed software?  
It is in this context that software intellectual property rights formspart of the conversation abouttoday’s transparent and sustainable supply chains. 
IDC research has shown that more than 70 percent of Thai businesses in 2011use some form of illegal and unlicensed software. These businesses expose themselves to legal and operational liability, security gaps and reputational risks. 
The legal and security risks of using pirated software are well established. 
And now, the supply chain risks of using pirated software are growing as buyers in the US insist on doing business only with manufacturers that abide by laws governing software copyright.  The potential problems caused by pirated software, such as civilsuits, supply chain disruption, reputational damage – means that it is simply not worth risking a business relationship with a user of illicit software. 
It is therefore time forThai manufacturers and suppliersto ensure that they address the supply chain threat of illegal and unlicensed software usage, turn it into an opportunity to differentiate themselves from competitors and enhance competitiveness in the global marketplace. 
To gain the trust from global buyers, Thaimanufacturers should treat the use of legal and licensed software as integral to theiroperations. They should adopt a pro-active approach to managing software assets and adopt adequate internal controls to ensure that they comply with the copyright law by using legal and licensed software in their operations.