Today, the purchasing and sales landscape has changed a lot, in terms of new communication channels, strategies, economic contexts, and the end customer. Ultimately, it’s the customers who hold the key to business growth, as the life cycle of the internal business processes of buying and selling companies depends on their demand.
Today's customers require a transparent supply chain; they are not only satisfied that the products they buy are of high quality and function properly, but they also have a strong concern for responsibility and sustainability in the manufacturing process of these products.
It is more than a reality that consumers have changed their purchasing philosophy. While there is an emphasis on checking the authenticity of the goods purchased, there is also a growing interest in the ethics of how these products are made.
This concept has started to become an important value to be studied by procurement companies, aware of the negative impact that a non-transparent supply chain can have. The risk criterion has established itself as a major player in analyzing the status of suppliers and the supply chain and is a good point for assessing the whole issue.
Risk Assessment for Supply Chains
The valuation of this type of risk in the supply chain is a very current notion, there is no specific regulation that can serve as a guide, but it’s possible to find certain common points that can help us to list two key factors that increase risk in suppliers:
Supplier belonging to a high-risk country: Every country, according to its economic, social, political, or geographical conditions, generates a specific level of risk. Those suppliers whose work methodology is based on a lack of minimum working conditions, respect for the environment, etc... are called high-risk suppliers and are currently under scrutiny by many international governmental bodies.
Supplier under investigation: Those suppliers that are currently under investigation, the subject of criminal proceedings, or supplier companies that have recently been convicted of crimes. Working with such suppliers will not give us a good public image, linking our name to these suppliers may be the best marketing campaign for our competitors.
High-risk suppliers offer their goods and services to millions of companies around the world, their special nature makes them the subject of criticism, study, and analysis, and they are part of lists and statistics that do not leave them in a good place.
Numerous governmental and institutional companies are urging companies to strive to maintain supply chain transparency, legislative and executive initiatives are prioritizing the study of the supply chain, demonstrating that the supply chain is becoming one of the biggest risks to a business organization.
The demand for supply chain information will increase over the years, so for the sake of your business, it is a good time to consider whether you have a transparent supply chain and if not, take steps to make it transparent.