Posted by: Christian Verstraete | March 4, 2010

Protect your brand through controlling your Supply Chain


Over the last month, Toyota’s brand has taken a big hit. It’s February sales in the US moved to 3rd place behind Ford, and GM. Who would have believed such situation just 6 months ago? Apple late last week had to admit some of its contract manufacturers were using child labour in the making of iPhones and iPods. There quick admittance probably saved their brand.

Both those examples demonstrate the importance of understanding what happens throughout your supply chain (and I use the term here in the widest sense, from raw material to end customer).

Combining three initiatives helps addressing the risk of brand damage. These are gaining an in-depth understanding of the Supply Chain, understand what the market is saying and supply chain audits/controls. Let me develop each of those in some more details.

We have already talked about how we could gain a better understanding of the Supply Chain. First we need to gain an understanding of the topology of the supply chain. Who are the companies participating. Tier 1 partners are easy, but it is moving up the tiers that become increasingly complex. But that’s where the danger may come from. In the Mattel case from a couple years ago, the problem was not a supplier, nor a supplier of a supplier, but a tier 4 supplier. Unfortunately, as the products were branded Mattel, they took the hit. Once the community is understood, one may want to put information sharing, communication and collaboration tools in place to facilitate the transfer of information at all levels. Obviously this requires collaborative suppliers and trust. Using a business exchange or cloud computing based solutions the collaborative network can be monitored and potential issues and strange behaviours identified.

Understanding what the market is saying would have helped Toyota understand their issues earlier.A vast amount of information is communicated on the internet and on social networking site, that it becomes mandatory for a company to monitor what happens. But to my greatest amazement, many well known brands don’t do this. I would start with three very simple steps. First, I would create a Google Alert with the name of the brand. This would provide me with a daily report of what is being said on the internet and in the blogosphere. I would make somebody responsible to read what is being said and look for potential clues. Second, I would create a Twitter and Facebook account. Besides being a mechanism to communicate with customers, I would also look at what they tell me. In Twitter in particular, I would closely monitor the #Brand tag to see what people say. In Facebook, I’d look for “friends”, and see what they tell me. And third I would search for forums on my brand or my products, subscribe to those (with an RSS feed to ensure I am not missing anything) and then listen and interact. Many customers are dying to tell something, why not encourage that dialogue.HP for example spotted a contrast issue with the camera of their TouchSmart when a YouTube video treating them as racists, turned up on Twitter. They very quickly intervened and addressed the problem.

But not everything can be addressed through remote monitoring. You need to go and see for yourself. And that is where audits and controls are playing a role. Many companies have a supplier code of conduct, describing what the suppliers may or may not do. Some of those requirements are not obvious for suppliers as it differs from their cultural heritage, so making them understand the importance of the requirement and why it is there is key. And then, doing actual controls (planned and unplanned), helps identify issues. The Apple example is a good one here. It is during one of those controls they found out. Now we talked about the tiers of suppliers. You may want to work with the tier 1 suppliers to have them auditing tier 2 etc. But here again, as your brand is on the product, you want to make absolutely sure the audits are performed seriously and completely. Maintaining the results and identifying the suppliers that are borderline helps you focus on the weak links in your supply chain.

Last but not least, dialogue with your suppliers and ask them where things can be improved. You will be astonished about the quality of the information that comes back, and I’m sure you will implement some ideas straight away. Collaborating with your supply chain, listen to suppliers and customers and continuously analysing what is happening are a great insurance to avoid trouble. Because the last thing you want is your brand name with bad news printed on the front page of the main publications. Take the necessary precautions ahead of time.

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Responses

  1. You’ve written a great article. I especially like the Google Alerts and forum-hopping ideas. Practical, usable and plain common sense that doesn’t strike most of us.

    I’ve also written a piece about this. It sprung from the belief that no company can have complete control over all aspects of their supply chain. We’re simply not there yet. So, what are the measures companies can take to prevent supplier misgivings from happening to them? That’s the question I seek to answer in my article called “The Apple that ate the child…” http://www.scmblog.com/2010/03/apple-that-ate-child.html

    I’m sure you’ll have a unique insight into this.

  2. […] came across Cristian Verstraetet blog post – Protect Your Brand Through Controlling Your Supply Chain. He is mentioning some interesting […]


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