1. Why is it necessary?
Supply chains are becoming increasingly complex and the best way to maximise visibility of risk and take preventative action is to “map” the entire supply chain, so you know exactly who is working on the project and for who. Most senior managers have no idea how many or which subcontractors are on site. Yet the risk of a lower-tier supplier being non-compliant in areas such as health and safety, CSR, insurance cover, financial stability and the Bribery Act is considerable.
What would happen if there was a fatal accident caused by a third-tier subcontractor? Ignorance is no protection in law and buyers are now expected to monitor compliance at all levels of the supply chain.
2. Create visibility
Research indicates that 40% of businesses procuring only in the UK have absolutely no information on Tier 2 suppliers. What’s more, of all industries surveyed, the construction sector was the least confident that its data on suppliers was robust and verifiable. The most effective way to do this is to implement a standardised approach to the management of supplier information. With an accurate database, buyers can request information from everyone in their supply chain.
3. Build a map
This works best when “cascading invitations” are sent down the supply chain. The buyer instigates the action by inviting its Tier 1 suppliers to join the mapping process. Tier 1 suppliers pass the invite on to Tier 2s, and so on right down through the tiers.
4. Motivate suppliers
It is critical that buyers get suppliers’ support in mapping the supply chain by clearly explaining the benefits. A big incentive for the supplier is that they will also be able to understand risk in their own supply chains, and improve their own business resilience. If suppliers are reluctant to provide information it is important to explain that they can control who has access to it.
5. Work collaboratively
It is not easy for any individual company to create a supply chain map in isolation. The most efficient and effective way to do it is to work within a collaborative community, where effort and cost are shared.
By Tom Grand, UK and Ireland regional director for Achilles, a global supply chain management company which operates the BuildingConfidence accreditation scheme. www.achilles.com/buildingconfidence
