Exploring Supply Chain Complexity, Complications and Clarity

Supply chain issues come in all shapes and sizes. Learn about some of the complex issues and complications, as well as the power of transparency.

Complexity and complications through internationalization and suppliers

Sourcing from various parts of the world is increasing. As supply chains become more internationalized, they naturally become more complex, making them increasingly prone to disruptions caused by a lack of supplier visibility.

Suppliers can import numerous risks, from third-party contractors entering your facilities to undertake crucial but high-risk activities to another supplier sourcing from low-cost countries with known social compliance issues.

Many companies also have international and complex procurement structures that greatly decrease supplier visibility, which can lead to customer and investor distrust.

Achieving transparency throughout your supply chain is essential.

A richness of risks

From the types of products and services to safety, social and ethical issues, there is a rich tapestry of supply chain risks. Here are a few:

• Country and/or region of supply – when sourcing from low-cost or high-risk countries
• Types of products and/or services – such as safety-critical items or those prone to theft due to high value on the black market
• Spending levels – how much money the company spends on particular products and/or services
• Safety – when suppliers import risks to the organization
• Reputation – when supplier behavior directly affects the organization’s reputation
• Quality – when high standards are required
• Social and ethical – when there is an increased risk of factors like bribery, corruption, modern slavery and child labor, etc.

Legislation – a double-edged sword

Alongside complexity and suppliers, there are always new regulations and legislation to keep up with. These create a double-edged sword. They are invariably enforced to strengthen supply chains and visibility by detecting illegal and unethical practices, thus protecting your organization. However, they pose steep learning curves that you must overcome to ensure compliance, otherwise you risk breaking the law or rules, resulting in hefty fines and brand distrust, at least.

Avoid losing time and money

You might be aware of weak points in your supply chain while other issues remain undetected. If you fail to address these, you could lose money or time, or both, and face reputational damage and shareholder and stakeholder distrust.

One of the most powerful ways to protect your organization and add value to products and services is through professional, independent auditing. Assessments help to verify risks identified during the risk assessment process and allow you to engage collaboratively with the supplier on remediation plans.

Maintain brand reputation

Besides financial and legal implications caused by high-risk suppliers, other factors can damage your brand, such as child labor, bribery, labor disputes and health and safety incidents. We are increasingly seeing that contractor health and safety is significantly worse than that of our clients, although the burden of risk sits with the buying company.

Your organization faces problems when noncompliance is identified within your supply chains. These high-profile situations can have a long-lasting impact on consumer and investor trust. Recent studies confirm that brand perception is a key competitive advantage and highly effective for attracting new clients.

Let us be crystal clear – understanding suppliers, products and raw materials

Transparency means understanding your suppliers and where your products and raw materials come from. This can be achieved through analyzing multiple sources of risks and consistently meeting and exceeding consumer social responsibility and environmental sustainability expectations.

Why is transparency so important?

Transparency can lead to an essential advantage – trust. Trust in your company, products and services, among other things, is naturally vital to your success, brand strength and growth.

To achieve transparency at scale, organizations must establish a shared vision across all supply chain stakeholders, one that fosters open communication and data exchange. Companies that support supply chain transparency at scale create a valuable asset to drive brand relevance and revenue – the ability to engage current and new consumers during their journeys.

Consumers:

• Over 50% actively seek to buy from brands they trust
• Over 80% must trust a brand before making a purchase
• Over 90% want more transparency
• About 75% are ready to pay more for products that show they are from ethical supply chains
• About 95% say they are likely to be more loyal to a brand offering complete transparency
• Over 65% think transparency is a brand’s most attractive quality
• About 65% would stop buying from a brand after one poor ethical issue

Organizations:

• Almost 70% say they do not have full visibility of their supply chains
• Around 60% believe that supply chain management gives them a competitive edge to further develop their businesses

Why SGS Supply Chain Assurance?

Our Supply Chain Assurance services provide auditing and verification across a multitude of areas and content. Whether using our checklists, customized programs and/or industry-driven initiatives, we are a trusted partner for deploying your program.

We offer comprehensive subject expertise and supplier assurance solutions in many areas, including:

• Social compliance
• Environmental management
• Quality management
• Information security
• Sustainability
• Governance
• Health and safety

Our customized audits are tailored to your organization. We have active programs with clients to audit and verify suppliers against a variety of risk-based content. 

Our knowledge and global network of experts enable us to leverage large-scale resources for you. With our experience and guidance, you can work quickly and easily toward compliance with local, national and international regulations, reducing errors, increasing consistency and promoting positive values within your company.

We offer invaluable insights through up-to-date and validated supplier information. Our data-centric methodology allows us to strategically examine your suppliers’ risks. We can tailor our approach based on the data and specific risk areas.

Combining innovative technology with subject matter experts

Our best-in-class technology and subject matter experts can help you to improve supplier data accuracy through:

• Risk assessment
• Self-assessment questionnaires
• Data validation
• On-site audits based on a supplier’s products, services and/or region of supply

Our software solution combines with our supplier onboarding infrastructure and global network’s data validation capabilities to support your supply chain evaluation and mitigation.

Data within any solution is only useful if it is accurate. We check suppliers’ submitted information for quality, accuracy and authenticity, alongside reviewing and asking them to resubmit date-sensitive information for the most accurate view of compliance at all times.

We also utilize a modular approach to help mitigate tier 1 supplier risks by covering a broad range of risk criteria, including health and safety, quality, environment and social responsibility. This can be fully customized to meet your specific risk criteria.

This is but an extract from our new Supply chain internationalization, risks and legislation – how experts, technology and customized audits are key white paper.

Or, check out our Supply Chain Assurance services.

For further information, please contact:

Jason Hulbert
Associate Marketing Manager
Knowledge
t: +44 7912 426878