Every company has a supply chain. The most common view on this is “one-up, one-down”, meaning that companies know the suppliers they source from and know the buyers they sell to. This simplistic view only represents a small fraction of the actual supply chain. Milton Friedman, an America Economist, once said while describing a lead pencil, “No one man in the world can make this lead pencil. It has been created by thousands of people, all working together to produce this lead pencil.”
Modern supply chains and brand reputation
Today’s supply chains are more complex than ever, and brand owners are being held ever more accountable about quality or sustainability issues in their supply chains. With the rise of social media, when a fashion brand owner, for example, is tied to a tier n sub-contractor using forced child labor, the damage for their reputation can be quite significant. It is therefore increasingly important for companies to find out if there are at risk suppliers or factories in their supply chains before a crisis happens. Globalisation and Internet technology have enabled us to purchase products from suppliers across the world. Although more information on potential new suppliers can be found on the internet, the depth of the supply chains has also significantly increased. This results in disconnected supply chains, with limited or no visibility. Supply chain mapping can help to identify hotspots and potential risks, in order to ensure future supply and become more sustainable.
Supply chain mapping to measure impact and protect brand reputation
The biggest impact most companies have lies beyond their tier 1 suppliers. Behind a single Tier 1 supplier, a multitude of Tier 2 suppliers are present, all delivering inputs. This process continues multiple times, resulting in a supply chain of thousands of suppliers, all directly or indirectly linked to your company. If suppliers are also subcontracting complete or partial orders, the supply chain becomes even longer and more complex.
Example of a fictitious supply chain.
Each node in the supply chain is a potential risk for negative impacts such as deforestation, worker wellbeing, child labour or environmental degradation. These impacts can greatly affect your brand once exposed by media or other stakeholders. It is therefore vital to identify and prevent any negative impacts. Supply chain mapping also results in identifying potential supply risks, potentially disrupting the production of your goods. Such disruptions have an enormous impacts on the results of a company and outweigh any investments made in better understanding and controlling your supply chain.
How supply chain mapping technology can help
With ChainPoint’s supply chain mapping technology, you can record and visualize your entire supplier base. Not only your Tier 1 suppliers, but also Tier 2,3,4 etc. It’s a multi-tier approach where by creating linkages between suppliers, relations are revealed, risks are exposed and corrective measures become easier to implement. Easy onboarding solutions make it much easier to discover all suppliers tied to your product.
Besides mapping your suppliers, ChainPoint’s technology also allows you to connect audit information, or information retrieved via self-assessments to individual stakeholders. Connecting this information using so-called RAG scores makes it immediately clear what your hotspots are.
Would you like to know more about the benefits of supply chain mapping and visibility in supply chains? Please don’t hesitate to contact us.