Do You Know Your Supply Chain?

The global supply chain is growing quickly for many companies across the globe at the same time that the regulatory environment is requiring those organizations to have ever-better visibility into the behaviors and practices of their suppliers everywhere and at all times.

As a result, elements of risk, security, social accountability, and market forces are combining to raise the stakes for enterprises seeking the efficiencies of scale that come from operating internationally.

Of course, not all suppliers are created equal, and being able to separate the good from the bad is important, taking into account risks of procurement, fulfillment, local (and international) labor laws, and environmental concerns.

One area where these insights are particularly valuable comes from initial sourcing of suppliers. Various tools, including scaled vendor ratings, are available and updated on a regular basis to ensure that they reflect the very latest information regarding important factors such as labor conditions and the environmental footprint of the supplier under consideration.

Understanding how to create value from the supply chain is about more than merely mitigating risk, however. Supply chains generate lots of actionable data; in the past, much of this was found in so-called “narrative” formats with contextual information. Although this is valuable, it made it difficult to properly mine that data. Quantifying that information and making it more granular and accessible is important, especially for enterprises that may have thousands of individual suppliers. It’s more black-and-white and somewhat less contextual than the narrative approach. There is still room for the grays of the narrative, of course, and the combination of the two allows manufacturers to best utilize all available information to make informed and prompt decisions.

In the final analysis, properly analyzing all the challenges and opportunities found in today’s increasingly complex supply chains comes down to transparency. It is difficult for anyone to hear about some of the workplace conditions that people in third world countries are often compelled to work under, and the enterprises partnered with these suppliers care about these issues from a human as well as a business perspective. Having the information available to peer into these suppliers’ internal processes helps ameliorate these issues, satisfying regulatory bodies as well as the marketplace of concerned customers. The reality is that this is a continuous improvement process, and the mechanisms to access more and better information are increasingly available to drive that improvement for everyone in the supply chain.

Article Reference: Quality Digest