Supply Chain Due Diligence Definition
Companies are under pressure like never before to ensure that their supply chains are ethically sound. But what does “supply chain due diligence” actually mean?
At its simplest, due diligence is the process of verifying that a company is doing what it says it is doing. In the context of supply chain management, this means ensuring that suppliers are adhering to ethical and legal standards, such as those relating to labour rights, environmental protection, and anti-corruption.
Due diligence can be divided into four main categories:
1. Compliance: This refers to checking that a company is complying with relevant laws and regulations.
2. Risk management: This involves assessing and managing the risks associated with a company or supplier, such as the risk of child labour being used in the production process.
3. Transparency: This means understanding how a company operates and where its products come from. It also includes ensuring that information about suppliers is readily available and accessible.
4. Governance: Good governance practices help to ensure that a company is well-managed and accountable. This includes having robust policies and procedures in place, as well as effective monitoring and reporting mechanisms.
