Transparency and Supplier Risk Assessment

The superficially simple business of bringing products from one place to another can, in reality, be fraught with danger. Responsible logistics managers must take risk seriously and make sure their supply chains are operating in a manner congruent with the ethos of the company and within applicable rules and regulations.

We operate in a global marketplace these days and products can be sourced from anywhere on the planet. However, not all markets have the same attitudes, rules, and regulations that we take for granted in the US and care must be taken to ensure supply chains are not compromised as a result.

Transparency and risk assessments are the answers to these problems. It's only by accurately assessing risk and ensuring operations are as open and honest as possible that we can ensure our supply chains operate at their best.

Transparency

Supply chains can often be opaque and nebulous beasts, with tendrils spreading out from a source until it's almost impossible to tell which products are coming from where. This is particularly salient for the medical device industry, which must source components from various parts of the world - including where raw materials are mined.

It can be tempting to put current supply chain issues entirely down to the COVID-19 situation. While it is of course true the pandemic has had a significant impact on supply chains, in some cases it is more accurate to say that the crisis simply magnified pre-existing issues, rather than created brand new ones. And this has a lot to do with the very nature of the relationships between companies and their suppliers.

"[These] problems reflect a longstanding and fundamental shortcoming in how companies' relationships with their product and component suppliers are structured," writes Harvard Business Review. "Even in the absence of black swan events [such as COVID], manufacturers will continue to be at risk until they establish new ways to work with suppliers that ensure full transparency regarding the sources, availability, and life cycles of their mission-critical products and components."

How, then, can companies transform these relationships and create a new landscape where transparency and risk mitigation are top priorities, and where information can be shared freely between all interested parties for the creation of a more efficient and effective medical device supply chain?

"The underlying dynamics of the need to shift to proactive 'pushing' of critical information by suppliers to manufacturers and away from the reactive 'pulling' of information from suppliers by manufacturers," continues Harvard Business Review. "Companies must expect all suppliers to have skin in the game and require them to identify and keep them informed of potential risks."

Supplier Risk Assessments

A supplier risk assessment does exactly what the name suggests. It helps companies in a value chain better understand the suppliers they do business with, examines any risks they may pose, and looks at how they manage those risks.

Supplier risk assessments seek to evaluate everything from business practices, product quality, and consistency, to health and safety and packaging.

Remember, when carrying out a supplier risk assessment, you are specifically looking at the risk they potentially carry towards your brand, not theirs. However, the goal is not to vilify or boycott suppliers that fall short, but to provide an opportunity to work together to improve standards for the betterment of all involved.

If a link in the supply chain feels it'll be punished for falling short of standards, the company will be less likely to be open and transparent about it in the first place, taking us back to square one. However, if all links in the chain understand they can come to each other with problems and be supported in solving them, it creates an environment of trust where companies are less reticent about being open and honest.

Of course, data plays a role in developing a transparent supply chain. By using data sharing and relationship management platforms, all stakeholders in the supply chain can unilaterally share information in real time. This not only provides actionable insights, but also further facilitates the environment of openness and trust we are seeking to establish.

"Using technology, supply chain leaders can design more reliable supply chains that bring greater visibility, agility and accuracy to their organizations," writes IBM in a blog post. "By using data management technologies - like AI, advanced analytics and scenario modelling - and continuously acting on derived insights to monitor your supply chain, measure risks, build visibility and improve resiliency, you can craft a risk management strategy that drives value."

Final Thoughts

Building a transparent and risk-free supply chain is a lofty goal and not one which is simple to achieve. It requires all stakeholders entering into a real relationship in the spirit of openness and honesty. However, if your company can achieve it, the benefits can be enormous.

Transparency and risk in supply chains are set to be hot topics at LogiMed 2022, taking place in March at the Rancho Bernardo Inn, San Diego, CA.

Download the agenda today for more information and insights.