Prevention Tainted Cargo

If you are part of the global economy, it's essential that you monitor your overseas suppliers and partners for product quality

The government warnings about tainted imports from China are ominous: poisonous chemicals found in toothpaste in July. Lead paint in Thomas the Tank Engine toy trains in June. Contaminated pet foods in May.

While government attention focuses on the problems in China, experts say the emergence of these deficient goods highlights the risks associated with today's global supply chains.

"There are more people that companies need to watch and make sure they trust," says Yossi Sheffi, professor of engineering at MIT and an expert in risk analysis and supply chain management. Supplier visibility is a problem for many organizations, agrees Mark Hillman, a research director at AMR Research. He says many companies operating globally don't know the players in their supply chain as well as they should.

Below are Sheffi and Hillman's tips for managing your supply chain risks through security, resilience and vigilance.

1. Focus on visibility inside your supply chain. Sheffi says you should be able to answer the following question: "Where's my stuff, what ship or truck is it on and what can I do to redirect it in case something goes wrong?" Companies need to watch their products all the way to the shelf. In many cases, counterfeit goods are introduced into the supply chain along the way, says Sheffi.

2. Keep an eye out for problems. Your company is responsible for staying abreast of what's going on at supplier companies around the world. Control Risks Group and iJET are examples of service providers that monitor international economic and political conditions as well as natural disasters. Risk managers use them to keep tabs on working conditions for far-flung employees and business partners overseas.

3. Know what you're getting into. Once you sign the contract, it's hard to verify that your supplier is meeting the same standards that it sold you on, says Hillman. Regular visits to suppliers and constant monitoring is ideal, but monitoring tools, such as Dun & Bradstreet's Open Ratings service, can also help companies identify potential problems, such as changes to a supplier's quality score or payment terms.

4. Collaborate with other companies. In many industries, your supplier is also your competitor's supplier. Work with others in your industry to audit suppliers and share the results, says Sheffi. 

Copyright © 2007 IDG Communications, Inc.

The 10 most powerful cybersecurity companies