Using Supply Chain Visibility to Care for the Health and Safety of the Global Consumer

The need for increasePersonal manager findig new staff for his company.d supply chain visibility has been clearly demonstrated by Honda’s recent recall announcement that will see another 100,000 cars being added to the recent wave of vehicles that have already been recalled by the likes of BMW, Chrysler, Ford, General Motors, Mazda, Mitsubishi, Nissan, Subaru, and Toyota; all because one common third party supplier has supplied a batch of faulty products.

The faulty products in question are airbags manufactured by the Japanese manufacturer the Takata Corporation. It appears that the bags (which were manufactured during the period spanning 2000 and 2011) can explode with enough force on impact to potentially harm the drivers and passengers in the vehicles to which they have been fitted. It clear that supply chain visibility did not exist and hasn’t existed throughout the period of manufacture.

Sourcing concentration creates risks

It may come as a surprise to many people to know that one manufacturer’s products are used across the board. However, due to the way that global trade has developed, the fact of the matter is that most manufacturing is outsourced to subcontractors – and a limited number of subcontractors at that.

The problem is that while product outsourcing and subcontracting has become a standard part of industry procedure, the outsourcing of risk appears to have been left behind, or overlooked.

In cases like this, when third party manufacturers or subcontractor have a quality issue, it has a knock-on effect to all parties within the supply chain; including of course the end user. Companies seem to have forgotten that if they choose to go down the outsourcing route, they are still obliged to deliver safe products that are fit for purpose, no matter who has been involved in their manufacture.

Suppliers and subcontractors, and their suppliers in turn, are all part of the responsibility that the owner of the supply chain has, to discharge; but in order to be aware of any shortfalls, total supply chain visibility becomes a key issue.

Treating all supply chain partners as internal departments

The practice that many supply chain owners have adopted, that supply chain partners are regarded as being external parties, must be stopped. It is not conducive to supply chain visibility. As can be seen in the recent recall incident, the third party manufacturer’s faulty components are an essential part of car manufacturers’ brands. It is the car manufacturers themselves who will be, and must be, held to account by their customers if their health and safety has been put at risk.

The fact of the matter is that thanks to e-commerce and the advent of social media, people all over the world quickly get to know if products are substandard, harmful, or unethical in some way. This of course results in a severe drop in demand, and manufacturers are coming to realise this and have to deal with it. If they are to maintain brand respectability and loyalty, the bottom line has to be set aside while quality assurance is given top billing.

The principle of outsourcing is not about to be reversed, so it becomes crucial for those who have control over outsourcing, to assume responsibility. This can only be done if good supply chain visibility can be achieved.

Sidestepping the issue and turning a blind eye

Only last year, General Motors gave a remarkable example of sidestepping the issue in terms of quality within their supply chain. This was in relation to an explosion at the Kunshan Zhongrong Metal Products Company, one of its second-tier suppliers. The president of General Motors, Dan Annann, is reported to have said that all of GM’s tier-one suppliers around the world must make sure they are sourcing supplies from partners who implement the right safety standards. They neatly sidestepped their own responsibility to make certain for themselves rather than passing the buck. And why stop At tier-one?

Unfortunately this is not untypical of industry as a whole. A recent study carried out by KPMG revealed that 49% of senior executives globally own up to the fact that they have no supply chain visibility past their tier-one supplier base. It’s actually quite frightening. It’s a combination of both sidestepping and turning a blind eye!

The urgent need for better supply chain visibility

What it boils down to is the fact that we are in desperate need of supply chain visibility across the board. Supply chains are becoming ever more technical, and the technology in administering them allows supply chain visibility if only appropriate communications are made correctly.

But it also means that the infrastructure of the supply chains needs to be re-evaluated to enable all partners within the supply chain to act rapidly and responsibly to issues that are uncovered by proper supply chain visibility.

The overall technology does exist, with many companies now computing in the cloud. The same way that social networks now hone in on important issues, supply chain technology also need to take a leaf out of this same and adopt a similar methodology.

The pursuit of transparency in supply chain visibility

Supply chain visibility needs to get to the stage whereby it integrates various ERP systems and all supply chain partners, and essentially, the data that is in circulation between them. In this way a manufacturer would not have to depend on a tier-one supplier telling it by email what its own suppliers are doing. Rather, they would be updated directly through the supply chain platform, in a similar way to a Facebook notification.

It’s down to supply chain owners to embrace new technologies and develop networks with transparent supply chain visibility, visibility that looks after not only product integrity, but the health and safety of its end users.

Is it time to build quality control notifications into supply chains as standard, to improve supply chain visibility? Have your say at the feedback section below.

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