Supplier Non-Compliance Can Make Your Brand Explode – And Not in a Good Way!

We welcome this post, our first guest post for 2017, from Daniel Ball, director at leading UK-based eProcurement provider Wax Digital.

Anyone who has watched the recent Westworld series will appreciate all too well the potential dangers of ‘pushing the technology envelope’ beyond its limits. And recently we’re seeing more and more of a shift from science fiction to damaging fact. Take the poor Samsung Galaxy Note 7; it lived a short life on the shelves when some models exploded and set on fire and the only choice for the phone manufacturer was to recall the product to avoid harming customers. Despite quick action the negative impact on Samsung’s share prices and the bad press it suffered meant huge damage had already been caused, and the money spent designing, developing and marketing this short-lived product had gone to waste. While the press fixed its sights firmly on the technology giant itself, like any company in this situation Samsung’s eyes will have turned to its supply chain to see where the fault lies.

It takes some real head-scratching to understand how a respectable brand with endless experience manufacturing electronic devices has suffered this crisis. Some analysts have put it down to Samsung’s competition with rival Apple given that it wasn’t long ago that the iPhone 7 plus came out and there’s every chance that the company feels the need to outdo its key rival. The Galaxy Note 7’s battery has been found to be bigger and have a higher density than the iPhone 7, suggesting that Samsung has tried to give it a longer battery life. More recent speculation notes that the space in between each of the layers in the Galaxy Note 7’s battery weren’t big enough, potentially causing elements of the battery to touch and create a spark. It appears to have been a case of trying to push a component’s capabilities too far.

Rushing products to the market only to experience a fault with them further down the line isn’t unheard of. Last Christmas saw several Swegways burst into flames, with one explanation being that the manufacturer wanted it on the shelves in time for the key buying period or to keep competitive. But with this race comes the risk of failing to ensure that components only perform what they’re capable of. What should manufacturers do to ensure that procurement and supply chain processes, particularly for technology products, don’t experience faults that harm those you want to win over: customers?

Complying with rigorous checks begins with your tendering process. Procurement managers can’t see it as purely the supplier’s responsibility to ensure that safety, legal and ethical requirements are met, and must check that suppliers carry out the expected level of inspections and procedures by putting this in their tender. While it might be tempting to let this fall by the wayside as time presses on, it’s vital that companies continually consider these requirements as a key factor, even with longstanding suppliers. It’s a two-way street: companies shouldn’t make overambitious requests with suppliers that could compromise safety, while suppliers should be prepared to challenge customers who might make such a request. Both parties are responsible to reduce risk that is brought into the supply chain.

Given the supply chain complexity that some industries can’t escape, minimising risk can be a challenge, particularly when operating on a global scale. By nearshoring their supply chains companies can shorten the process and potentially tighten compliancy checks by leaving less room for risks to escalate, and legal and cultural differences between different parties in the supply chain are less of a worry. Of course it’s not always possible to localise supply chains, but procurement technology can win half of that battle by enabling collaboration and visibility to ensure that any legal loopholes or conflicts of interest are flagged.

Without seeing evidence of a supplier’s own manufacturing and sourcing practices, no company can ensure that their goods or services being supplied are of the quality expected. The Samsung case shows that even as a company with years of experiencing manufacturing products, just one blip in the supply chain can be the difference between retailing a hit product and suffering your worst PR disaster. While retailing products to get them ready for seasonal periods or to keep competitive can be tempting, compliancy checks always apply. It begins with instilling this into your company culture, and having safety and ethical requirements high up on your agenda.

Modern fiction regularly warns us of the risks of pushing technology beyond its limitations. While the consequences of similar real-life issues like Samsung’s may not be as earth-shattering as those in books and films, they do pose real questions about the need to balance progress and innovation with risk and technical capability.

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