Reputational risk from supply chains
How many times have we heard Apple come under fire because of terrible employee health and safety practices at supplier factories in China? Or clothing brands held responsible for awful working conditions in India and Bangladesh, or sporting goods manufacturers accused of fostering child labour?
Ignorance of poor practices in the supply chain is never held to be an excuse. The organisation utilising the poorly behaving supplier is expected to have done their homework and weeded out suppliers whose practices are not in line with current best practice or regulatory requirements.
Failure to effectively manage the supply chain can be a major source of corporate embarrassment and a risk to the reputation of an organisation.
Organisations that manufacture or distribute goods are the most obviously vulnerable to this risk. However, in reality the problem can affect any organisation from manufacturers to banks to governments; and the advent of global communications, social media and citizen journalism means that customers and the general public will soon know all about it.
So, does your organisation have a register of all suppliers? Has any effort been made to check the operations of key suppliers, and whether they are compliant with modern work practices and regulatory requirements? Do you know the country of origin of any key components or services?
If not, it may be time to give consideration to this often neglected area of risk management.
Please contact QRMC for more information, or for assistance to assess the risks inherent in your supply chain.