Brands and retailers struggle to get a clear view into their diverse and complex supply chains

Brands and retailers struggle to get a clear view into their diverse and complex supply chains

The recent pledge by British prime minister Theresa May to invest a further GBP33m in fighting modern slavery, coupled with the importance of companies knowing what is happening in their supply chains, has led to an increased focus on supply chain mapping. But while there are many tools on the market offering such solutions, there is a lot of variation and confusion over what this actually means, according to Hannah Harris, product marketing manager at Historic Futures. 

Brands and retailers are held responsible for knowing how the products they sell are made and where raw materials came from – but what goes on in supply chains beyond tier-one is often hidden from view. 

Supply chain mapping tools are appealing because they aim to make it easy to see how a supply chain is connected together. They are easily presentable, shareable and can highlight where the potential risks in a supply chain are. But how is the data to complete these maps collected and pieced together? 

Some solutions only offer visualisation services, meaning that brands have to collect the data themselves. Other solutions offer tier-one supplier management services, with the ability to request data from tier-one suppliers about what the rest of the supply chain looks like. 

Another waterfall approach sends questionnaires or requests for information (RFIs) to tier-one suppliers who report back who they source from. These tier-two suppliers are then sent a separate questionnaire and so forth. These solutions mimic the traditional supplier spreadsheet/questionnaire approach and indeed, being technology based, are likely to be a much quicker and efficient way of collecting such information compared to spreadsheets. 

However, questions about all of these approaches remain. How reliable is the data that is being reported back? And how do such approaches handle changes in the supply chain? 

Unreliable data

Divorcing the supply chain from the actual product in question presents the supply chain as something static and unchanging, which of course it isn't. One-off questionnaires, or RFIs, as part of a supply chain mapping exercise can lead to unreliable or incomplete data about who suppliers are sourcing from, as the changing nature of supply chains is not well covered by such one-off exercises. 

Stories of suppliers diverting parts of their production to unauthorised subcontractors or breaching supplier terms and policies are well known. Indeed, Australian surf and ski-wear brand Rip Curl hit the headlines earlier this year after an investigation found some of its clothes were made in an unauthorised factory in North Korea.

Rip Curl "screws up" as ski-wear made in North Korea

With so little knowledge about how frequently suppliers are switching sources, or how much variation there is in the lists of suppliers they could potentially source from, this only heightens the challenge of getting reliable information so necessary for the creation of useful and meaningful supply chain maps. 

The massive problem of lack of transparency and traceability across global supply chains has also been highlighted this week, after US department store retailer Target Corporation pulled all luxury bed linen produced by Welspun Global Brands over concerns about the provenance of the cotton used in its products.

Cotton supply chain transparency an ongoing challenge

It is impractical to check every supply chain for every product; the costs would enormous. One option is to select key specific, identifiable products to be researched based on their risk profile. Maps about different products can be analysed and scrutinised to pinpoint areas of highest risk or concern.

Questions can then be passed down through the chain, like passing a baton between suppliers, asking if they were involved in the production of a specific product. This keeps the supply chain connected and provides 'second party verification' giving brands better, more reliable data about where processing stages took place and where raw materials came from, as each supplier has to confirm their involvement in the chain. 

As questions and responses flow, data can be collected and supply chain maps can be built, from raw materials to finished goods. This way brands and retailers stay in control of the data they need, collecting it direct from the organisations involved in a specific product supply chain, not relying on information provided to them second-hand or on generalised views detached from individual products.  

With an ever-increasing stream of insight about the realities of child labour, modern slavery, unfair labour practices and environmental damage occurring as a result of global supply chains, the pressure is mounting on companies to increase their knowledge about what is going on in the supply chains behind the products they sell. The process might seem daunting, but it is possible. 

About the author: Hannah Harris, product marketing manager at Historic Futures, is an expert in suppply chains, product integrity, traceability and supply chain risk monitoring. The firm's recently launched online supply chain risk monitoring tool, String3, enables organisations to ask questions about how and where their products were made.