To stay competitive, companies are increasingly looking deeper into their supply chain to identify both efficiencies and areas to mitigate disruptions. As the world is drawing closer together, businesses face the dire need to understand the holistic view of their network. Supply chain mapping is the first step in creating an “outcome-driven supply chain.” This process identifies the change that will differentiate an organization from its competition, serve a client base with a prosperous value proposition, reduce internal cost, and drive profitability. With natural disasters, factory fires, CSR issues, and health and safety failures increasingly impacting global supply chains, mapping the supply chain down through every tier is the only way to mitigate a growing burden of risk. To avoid the pitfalls, here are four top tips for effective supply chain mapping:
Recognize the risks
It is crucial for companies not just to know their first tiers suppliers but also their second and third tier suppliers as well. The brand’s value could be eroded or destroyed even through the errant actions of a lower-tier supplier. Businesses should also keep tabs on the potential risks and plan accordingly to meet these contingencies. Identifying the risks well in advance is one of the most important steps while undertaking supply chain mapping.
Having visibility of the supply base across all tiers plays a significant role in mitigating supplier risk and being able to respond promptly when a disaster strikes. It is essential for companies to create a co-ordinated global supplier database, before moving on to build an accurate supply chain mapping process, detailing every supplier at every level. Relying too much on first-tier suppliers managing the lower tiers, result in buyers having no idea who those lower-tier suppliers are and what measure of compliance they hold. This is not sustainable.
Chart out a map
One of the most effective ways to gain visibility throughout the supply chain is to chart out a map, which requires a standardized approach to the management of supplier information. With an accurate database, buyers can request information from everyone involved in their supply chain. The buyer initiates the action by inviting its first-tier suppliers to join the supply chain mapping process. Tier one suppliers pass on the invite to tier two suppliers and so on, right down the supply chain.
Getting suppliers’ support in supply chain mapping is critical to the success of this initiative. This can be achieved by clearly communicating the benefits. A significant incentive for the supplier is that they will also be able to understand risk in their supply chains and improve their personal business resilience. Initially, some suppliers may be reluctant to furnish the required information, especially if they feel the information is sensitive. So it is essential to reassure suppliers that they can control who has access to their information and can maintain commercial confidentiality.
To know more about benefits of supply chain mapping for your organization