Tackling Complexity in Multi-Tiered Supply Chains

The modern-day supply chain is a complex, multi-tiered network that's made up of continuously evolving relationships with thousands of suppliers around the world. Tackling this level of complexity and keeping risk at bay is not easy for organizations and even those that use enterprise-wide software platforms face challenges in this realm.

"Globalization and shifting patterns of trade can quickly create new risk hot spots," says Sedex's Mark Robertson in How to tackle complexity in multi-tiered supply chains. "All of this makes any kind of commitment to improving standards at scale more challenging."

In mapping and understanding supply chain risk, for example, Robertson says some companies focus on "top-down" approaches to responsible supply chain management, assessing first-tier supplier's performance based on their publicly-disclosed data.

And while this may seem like a logical starting point, Robertson says the approach can create blind spots as "environmental, social, and governance (ESG) risks often lie deeper in the supply chain where knowledge and capacity to address risks can be limited."

Blame the fact that most companies don't fully understand the complete scope of supply chain complexity that they're dealing with, says Robertson. Take the large supermarket chain or discount retailer that channels most of its energy into its first tier of suppliers, he says, and then doesn't look beyond that tier to detect and address others areas of supply chain risk, the potential for disruptions, and other issues.

"Organizations have to look beyond that first tier to gain awareness of the full scale and scope of different risks that exist," says Robertson. "In many cases, that requires [examination] of thousands of touchpoints across many different countries, ...