Supply Chain Of Trust: Building a resilient supply chain
Managing the new reality of global supply chains
Supply chain globalization has enabled companies to reduce costs and increase efficiency by sourcing from suppliers across the globe. At the same time, supply networks have become more complex and interdependent and with greater exposure comes greater vulnerability to any number of disruptions.
As a result, procurement leaders need practical answers. They are looking at how to prioritize risks, make sound sourcing decisions, balance resilience with cost, and improve supply chain due diligence.
Bureau Veritas’ Supply Chain of Trust white paper examines approaches to mitigating disruption, strengthening organizational preparedness and managing wider dependencies across the value chain. It also explores the role of due diligence, regulation and strategic action in creating more responsible and resilient supply chains.
What are the sources of supply chain disruption?
Six main sources influence the current supply chain risk landscape:
- Geopolitical: These impacts arise from geopolitical confrontation, trade wars and tariffs. Recently, the war in Ukraine and escalating Middle East tensions have demonstrated the consequences these conflicts can have on global supply chains.
- Regulatory: Companies need to assess and address environmental and human rights across their supply chains to ensure compliance with regulations across jurisdictions. Reconciling conflicting regulatory requirements remains a significant challenge for companies operating across borders.
- Environmental: Climate events such as natural disasters, long-term cycles and other weather phenomena are adding further pressures. The overconcentration of production networks means a single event can disrupt a whole chain.
- Supplier Failure: These risks stem from the inability of a single supplier or an entire sector to meet company demand. Causes can include public health crises (such as the COVID-19 pandemic), obsolescence, industrial limitations, disrupted material delivery, and more.
- Geographic Concentration: Suppliers clustered in specific regions or countries leave supply chains more vulnerable to localized disruptions, especially in raw materials and processing.
- Cyber and Digital: Interconnected digital systems are increasingly necessary to manage procurement, production planning, inventory, logistics, payments and supplier communications. Threats such as data breaches or limited visibility over digital tools can greatly impact supply chains.
Key figures
THE 5 CAPABILITIES behind a systemic approach to supply chain risk management
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Robust Supply Chain Mapping
Understand interdependencies beyond tier-N suppliers, mapping physical and digital dependencies. Identify hidden concentrations and common points of failure before they are exposed by disruption.
Robust Supply Chain Mapping -
Identification and understanding of systemic single points of failure
Prioritize critical nodes whose disruption could have cascading impacts. This will help distinguish between manageable local disruptions and risks that could compromise business continuity.
Identification and understanding of systemic single points of failure -
Stress-test for shock combination
Use scenario modeling to test plausible combinations of events and their knock-on effects, define escalation thresholds and implement mitigation measures.
Stress-test for shock combination -
Build network optionality
Have practical alternatives around critical dependencies, using measures such as multi-sourcing.
Build network optionality -
Continuous and cross-functional risk management
Establish permanent supply chain-dedicated teams to develop a faster, more coordinated response against disruption.
Continuous and cross-functional risk management
Your global partner for supply chain resilience
At Bureau Veritas, our global team of experts across 140 countries supports organizations with practical solutions to build resilience.
We understand the impacts of supply chain disruption and can help you manage risk and gain competitive advantage through:
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FAQ
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What is supply chain resilience?
Supply chain resilience means understanding where dependencies converge, anticipating how shocks may interact and maintaining viable options when a critical node fails.
What is supply chain resilience? -
What is supply chain due diligence?
Supply chain due diligence is a risk management process undertaken by companies to identify, prevent, mitigate and account for negative social, environmental and ethical impacts across their suppliers.
What is supply chain due diligence? -
What is the OECD’s 6-Step Due Diligence Framework?
The OECD’s 6-step Due Diligence Framework serves as an international reference framework for businesses and investors seeking to address their impacts on people, the planet and society.
Central to the framework is risk-based due diligence. The OECD’s approach calls for action to be prioritized according to the severity and likelihood of the potential impact, while remaining appropriate to the company’s circumstances and level of involvement.What is the OECD’s 6-Step Due Diligence Framework? -
What are the types of supply chain vulnerabilities?
Supply chain vulnerabilities can be divided into four categories:
- Upstream: vulnerabilities related to the sourcing of raw materials and their movement to production sites.
- Midstream: vulnerabilities linked to manufacturing, warehousing and distribution activities.
- Downstream: vulnerabilities that begin once a product is made.
- Logistics: vulnerabilities tied to the connection of these stages through the coordination of the movement of goods.
What are the types of supply chain vulnerabilities? -
What are the benefits of a risk-based due diligence approach to supply chain risk management?
Supply chain risk management is the process of identifying, assessing, mitigating and monitoring vulnerabilities that can disrupt a company’s supply chain.
Implementing a risk-based due diligence approach helps companies respond to overlapping demands in a coordinated way:Identifying where challenges may occur.
Prioritizing the most severe risks.
- Taking proportionate action across their operations, supply chains and business relationships.
What are the benefits of a risk-based due diligence approach to supply chain risk management?