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Andrew Savini

Supply Chain

Do You Know Your Supply Chain?

You better, because the stakes are higher than ever before

Published: Monday, July 21, 2014 - 12:12

Global supply chains are growing significantly larger and more complex for many companies across the globe. At the same time, the regulatory environment is quickly evolving, requiring these companies to have more visibility into the behaviors and practices of their suppliers. As a result, elements of risk, security, social accountability, environmental sustainability, 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 help clients separate the good from the bad is one reason why a business assurance partner such as Intertek is so important. Testing, inspection, and audit (TIC) agencies such as Intertek are embedded in many countries—working day-to-day within the supply chain to manage risk and improve supplier performance. Our role as an intermediary between the enterprise and the supplier provides better insight into 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. Sometimes having a bigger picture of a supplier, such as a supplier profile found on Tradegood.com, can give a more accurate assessment of the supplier’s various risks prior to sourcing or procuring goods. Beyond sourcing, a company’s current supplier list should be used more effectively through a supplier risk profiling and risk assessment system. By investing in this area, resource-constrained companies have shown to have significant cost savings due to enhanced decision making and prioritization of budgets against the onslaught of supplier audits, inspections, and testing requirements. 

Understanding how to create value from the supply chain is about more than merely mitigating risk. Supply chains generate lots of actionable data from a variety of sources such as inspections, audits, and product testing. In the past, much of this was found in so-called “narrative” formats with contextual information. Although this is valuable, reports could tend to read like novels, which made it difficult to properly extrapolate the critical supplier risk data. Quantifying such information and making it more granular and accessible is important, especially for enterprises that may have thousands of individual suppliers. Assessing supplier risk should give buyer corporations not only the pertinent information they need to evaluate their suppliers’ performance against a buyers’ expectations, but also “benchmarkable” and “mineable” data that can be used as part of a buyer’s overall supply chain risk management program. Although such an approach is more black-and-white and can seem less contextual than the narrative approach, there is still room for the grays of the narrative. Ultimately, it is the harmony of the two objectives (depth and breadth of information) that allows multinational organizations to make better and more informed and prompt decisions on supplier relationships.

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 the developing world 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 most information available to gain insight 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.

Visit online for more information about the management of suppliers and the supply chain. You can also watch the following video, in which I am interviewed in depth about these topics.

Andrew Savini is the manager of business development in the suppler management and audit team for Intertek, a Quality Digest content partner.

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About The Author

Andrew Savini’s picture

Andrew Savini

Andrew Savini manages the development of new market opportunities for supply chain risk management regarding to social, environmental, security and quality areas for Intertek Group. He also develops new solutions to ensure companies are well-prepared for new regulations such as the conflict minerals traceability programs. Savini has led the design of nonfinancial due diligence and risk mitigation programs for companies in food and agriculture, electronics, textiles, consumer goods, pharmaceutical and automotive sectors. Savini has bachelor’s degrees in economics and international relations. He has international business experience in 30 countries for major corporations’ reputational risk programs.

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AIAG CQI 19

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