Transparency and management custody down the supply chain are very important in today’s business – from avoiding horsemeat in processed food to eliminating clothing production in structurally dangerous factories. Knowing where products come from is paramount to secure:

• Final user accountability (the guilt free purchase for Mrs Jones)
• Legal compliance
• Quality, service, code of conduct and price assurance

Sub suppliers (organisations supplying the direct suppliers) need to be managed and assured by Retailers, Traders and Producers. This has been and still is a daunting prospect, especially when the numbers involved take a steep exponential curve across various geographical locations. Typically a retail company’s vendor base can move from a hundred direct suppliers to thousands of sub suppliers. However, no matter the numbers and logistics involved, this issue need to be addressed and secured with the following:

• Be a major part of the buyer- supplier relationship management
• The Supplier takes responsibility for their suppliers
• The Buyer is clear on the sub supplier requirements i.e adherence to its own specification or industry standards.
• The Buyer has a regularly updated database of suppliers and sub suppliers..

To manage and handle sub suppliers in a practical and concise way Buyers should consider:

1. The sub supplier requirements are a ‘lite version’ of their full code of conduct, quality specification and delivery conditions – secure the absolutes of customer, legal and company demands eg child labour, working hours, process control and tolerances etc..
2. The Buyer and Supplier agree on the mechanics of how sub suppliers shall be checked and managed. eg auditing, verification material, designated factories and follow up reporting.
3. The Buying Team add Sub Supplier management to their visit and meeting agendas with their vendor base.
4. Where practicable, the buyer follows an industry standard to make it more manageable for the suppliers and the rest of their customer base.
5. It should not just be an ethical requirement but also include quality assurance, production planning and price development.

The auto and aerospace industry have been working with and down their supply chain for many decades. They are working in high value, scientific/engineering industries with limited number of sub suppliers. The challenges in a consumer led, general merchandising, clothing and food supply industries are certainly different and probably not so exacting as science and engineering but they are no less important.

In my experience, the toughest part of implementing sub supplier management is the initial denial – ‘its not our responsibility and the numbers involved are huge, it cannot be done’. However, it can be achieved through a practical approach and management relationship between the buyer and direct supplier. The acceptance on the importance and responsibility to manage further down the chain secures the business for all stakeholders, including the final user – Mrs Jones!!

Can we help you and your business to secure further down the supply chain!! Please contact us for an initial discussion..

Mark K. Astley Robert Vernon Associates Ltd.