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Service Supply Chain Risk Management

Last modified: September 26, 2017

Reputations at Risk: How well is your service supply chain prepared to handle the worst case scenario?

Is your service supply chain putting your company’s reputation at risk? From sweatshop conditions at your suppliers, to bribery and other trade compliance issues, to quality control headaches, each segment of your supply chain includes risk.

Smart companies learn how to assess risk and manage it through effective practices. This article looks at service supply chain best practices and how they affect your reputation.

Fraught with Risk

Business leaders know that sometimes decisions need to be made with less than ideal options – working with what exists to get to the ideal goal. Presumed risk is inherent in any organization serious about growth and profit.

But business reputation hinges on how well a company’s leaders manage those risks. No one will remember that risk was a necessary ingredient when you fail to deal with its consequences.

Supply chain by definition connected pieces inherently fraught with risk. The service supply chain manager’s reputation is built on how well risks remain unknown to stakeholders and end customers – only this will ensure repeat orders.

Global supply chains are especially subject to risks and roadblocks from a host of contributing factors including: external factors, failings of third parties, as well as the inherent nature of things to break, often at the worst times. End customers only notice these things when their promised deliverables are late, or lost forever.

Service Supply Chain Reputation Management

Weathering business disruptions thus becomes a critical component in doing business. Building a leading reputation comes from continuous reliability, in turn achieved by managing risk to overcome disruptions.

To be effective, organizations need to understand the components of reputation management and how to effectively mitigate risks associated with reputation.

Read on to get better at service supply chain reputation management as we dive into the following critical components :

1. The Value of Reputation
2. The Threats to Reputation
3. The Drivers of Reputation

Finally, we’ll cover more detail on how to Manage Supply Chain Risk AND Enhance Reputation.

1. The Need for Reputation Management

Within the global supply chain environment, what worries managers and customers the most are compliance issues.

The Baker & Mackenzie study, “The Companies You Keep: Global Supply Chain Management: Five Steps to Managing Third-Party Risk” examined the links between service supply chain solutions and reputation management.

Nick Coward, chair of the Global Trade and Commerce Practice at Baker & Mackenzie stated: “What emerged from the survey, topping all and equal to production quality, was compliance issues.”

Companies are concerned about risks that came from using entities that are “bad actors”. This entails corruption and bribery issues, or entities placed on restricted party lists, as well as association with sanctioned countries or even the financing of terrorist activities.

Globalization has shown that without due care, a company can become tarred with a very undesirable brush, and suffer a massive blow to its reputation.

2. Problems Can Become PR Nightmares

Supply chain weaknesses, transient disruptions and unsavory partnerships are among the issues that can place a company under a microscope and give the public a keen view into the underlying values of an organization.

Reputation is often a show of character, determined not just by what is said but by what is done. The perception created determines a company’s future success and strength of networked relationships.

Recent examples of crisis in reputation management include attention-grabbing publicized suicides at the Foxconn manufacturing facilities in China, deadly fires at textile factories in Bangladesh, contaminated food occurrences, and defective airbags endangering consumers.

Businesses such as the Gap have repeatedly come under investigation for using underage workers employed in appalling factory conditions.

Extended supply chain partners, subcontractors and practices will be judged according to the accepted standards of behavior prevailing at the customer end, not at the source.

A lack of foresight and supervision, or a breach of practice through outright corruption, can create a scandal for an organization that will present a huge challenge to erase from public memory, at the very least requiring additional resources and usually unbudgeted money.

3. Rational Drivers of Reputation Management

The RepTrak® model for measuring corporate reputation defines the rational drivers that affect emotional perceptions of a company.

When rational drivers create a positive perception about a company this encourages a desire to become involved with it through purchasing, recommendations or employment.

The rational drivers of reputation are:

  • Products/Services
  • Innovation
  • Workplace
  • Governance
  • Citizenship
  • Leadership
  • Overall Performance

The benefits for companies that use these concepts to build their reputation include reduction of overall costs, higher market valuations and faster recovery time from downturns.

Reputation management is a tool to create new relationships and build stronger bonds with existing vendors and consumers. Reputation builds a network of loyal individuals who believe in the values and practices of a company, and who constitute a support during changing times.

Service supply chain solution performance is inextricably interwoven with the rational drivers of reputation.

This is most greatly seen and most critically true within manufacturing and distribution centered industries. Consumer goods, food and beverage, industrial products and the automotive sector are all examples of success and failure happening within modes of perception by stakeholders and customers.

Enhancing Reputation Through Service Supply Chain Solutions

Better practices within a supply chain will automatically reflect upon the reputation of an organization.
There a number of ways to create processes that will produce positive effects through the implementation of service supply chain solutions including:

  • Creating processes and methods to “talk with” consumers creates an image that an organization cares about their concerns and needs.
  • It will also create better data directly from customers that can inform product development and forecast demand.
  • Being open with supply chain reporting and disclosure develops the image of a trustworthy organization with nothing to hide. The idea is simply, this is what we do and how we do it and we have nothing to hide.
  • This will also attract others who share in the idea of transparent business practices, and create an invitation for direct and above-board dealings.
  • Strong communications and supportive relationships allow suppliers to preempt problems and for organizations to see and fix an issue at an earlier stage that mitigates disruptions and negative consequences.
  • Build relationships with local vendors that have clear processes that are aligned with those of an organization of a whole.
  • Have standards for subcontracting and supervision that tightly link headquarters and critical decision-makers with the real-time individuals and practices actually being implemented within an extended global supply chain.
  • Too often out of sight becomes out of mind and that is where better transparent service supply chain solutions can inform the relevant users of a supply chain before issues become public.

Best practices from the Flash Global supply chain risk management strategy include:

  • Using badged employees rather than subcontractors, in India, Brazil, LATAM, APAC, and other countries – helping us manage global supply chain risk more effectively.
  • Transparency as a mandate within communications and processes – this also helps our partner clients build better reputations.
  • Flash Global FlashView® deployment – unique technology that offers unparalleled visibility of shipments through all specified milestones in the extended global supply chain.

Flash Global focuses on managing risk and managing reputation as a twinned endeavor. Our supply chain solutions protect and enhance client reputations and uphold service level agreements (SLAs) with their customers.

Download a case study demonstrating how risk management and reputation enhancement were applied to a supply chain consisting of over 700 forward stocking locations, 17 distribution centers and in-country personnel across six continents.

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