Knowing who your suppliers are can play a significant role in reducing risk in a global supply chain.
Iconic Australian surf and ski-wear brand Rip Curl has admitted it ‘screwed up’ after an investigation found that some of its winter collection had been made in North Korea, yet labeled as ‘Made in China’. The company has taken full responsibility for the situation, but places the blame on a supplier diverting production to an unauthorised factory, without its knowledge or consent. This breach serves to highlight the complexity of effectively monitoring a global supply chain and exactly how important it is to know who is supplying each component of your products.
Do you know who makes your products?
The revelation reveals some serious gaps in Rip Curl's knowledge of its downstream supply chain, which raises the question, how many other companies do not have a clear idea of who is producing their products?
Rip Curl’s chief financial officer Tony Roberts admitted to The Sydney Morning Herald that the company “only became aware of it after the production was complete and had been shipped to our retail customers”. With a thorough and efficient management system in place to track orders throughout the company’s supplier network, this could have been picked up on early and avoided, saving the brand time, money and face.
Oxfam Australia’s CEO Helen Szoke said: “Rip Curl has no excuse for not tracking clothing produced within its own supplier factories,” and called for the company to dramatically overhaul its sourcing practices in light of this. The brand is now stepping up its inspections and audits to ensure it does not happen again.
Global supply chains are rapidly growing more diverse and complex, and many businesses could now be in a very similar position without realising it. Although they may know who their tier one, and possibly even tier two and three suppliers are, further down the chain it becomes much more complicated and harder to keep track of. It’s easy to see how retailers could be unaware of changes like this happening within their supply networks.
Without a clear overview of their supply chains, companies place themselves at very real risk of rogue sourcing and supplier fraud happening right under their noses. Suppliers breaching terms and policies by diverting production to cheaper factories not only runs the risk of incidents like this damaging the brand's reputation but can also prove to be very costly for the business. Unapproved suppliers may not have the same standards or quality controls in place, meaning retailers can find themselves wasting time and money on unnecessary returns and re-orders. Retailers are also not getting what they pay for if their supplier decides to contract the work out to a cheaper factory, keeping the additional profit for themselves.
Mapping a fully traceable supply chain
With Segura brands can map out even the most complex of supply networks. By building an accurate supply chain map, detailing each supplier at every tier of the supply network, retailers can gain a clear overview of who is supplying what, when and where. A product's journey can then be tracked throughout the entire network to ensure only approved suppliers are involved in its production. This allows businesses to rest assured that they know exactly where each part of their product was sourced, from raw materials, to fastenings, labels, and finally the finished item.
Ensuring components are made only by approved suppliers eliminates much of the risk and gives businesses a firmer grip on managing the quality of their goods. Retailers can be confident that they will not encounter any nasty surprises along the way and that products will meet their standards first time, creating a more efficient and cost effective supply network.
