Managing Supply Chain Risk: Reputational Ethical Environmental - Legal

Abstract

In this short report we explore some key aspects of supply chain risk. Drawing on interviews with seven major UK-based companies in the construction, property, utilities and rail sectors, we review companies’ approaches to ‘REEL’ supply chain risks: reputational, ethical, environmental and legal. These risks arise where the actions of a supplier may damage its customer – even if the customer is separated from the supplier by several links in the chain. Examples of this kind of risk include the reputational damage inflicted on a firm when one of its suppliers is found to be illegally or unduly damaging the environment, or hiring illegal labour, or engaging in some other breach of acceptable business practice. Fairly or unfairly, large companies may be held to account as if they were the culpable party, and are seen as sharing at least some of the responsibility for the supplier’s behaviour What firms should actually do in the face of these challenges remains unclear. By exploring these issues we suggest a series of insights that may help organizations navigate this complex terrain.