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9 September 2013

Poor supply chain management "increases risk of reputational damage"

Content team

Firms looking to protect their brand against negative publicity need to make sure they have full visibility throughout their supply chain in order to spot and act on any suppliers that may be engaging in illegal or unethical activities.

This is according to Oxford University's Said Business School, which said increasing traceability in a firm's network of suppliers is a key first step towards reducing a firm's exposure.

"In a traceable system, firms are able to identify materials and products, track their locations, and account for any supplier processing that has occurred prior to the item’s arrival at their doors," the institution stated.

Problems in the supply chain can hit businesses in many ways, the company noted. For instance, many businesses saw their brand reputation damaged earlier this year as a result of the horsemeat scandal, caused by insufficient oversight of trustworthy suppliers.

Meanwhile, the Rana Plaza factory collapse in Bangladesh brought to light questionable practices tolerated by many high-street fashion retailers, while electronics companies such as Apple and HP have also been forced to deal with allegations of poor conditions at Chinese supplier Foxconn.

"In the past, it was believed that 'one-up, one-down' tracking – that is, knowledge of the immediate past owner and immediate future owner – was enough to guarantee sufficient information to track the history of a product," the Said Business School stated.

However, in today's more complex environments, this is often not enough. These days, it was noted that if just one link in the chain fails, the consequences can be far-reaching. so it will be essential for companies to develop their knowledge of distant parts of their chain - so-called tier-2 suppliers - that would have in the past gone unnoticed.

Knowing who is part of the supply chain is critical to improving the operations of an enterprise, Said Business School stated, adding that the most proactive customer-facing companies are already putting in place policies designed to improve the transparency and accountability of their suppliers.

Content team, Bureau van Dijk

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