Global supply chains are inherently complex and opaque. The IntegrityNext Multi-Tier Supply Chain Visibility solution offers the transparency and insights that regulators are increasingly demanding.
Achieving complete supply chain visibility is a challenging task, but it is essential for identifying potential risks - such as disruptions, quality issues, or sustainability concerns - before they escalate into critical problems. With insights into every layer of the supply chain, companies can proactively address these challenges, implement contingency plans, and take appropriate action.
Clear visibility across the entire supply chain also provides numerous opportunities. It enables companies to identify inefficiencies, redundancies, and areas for improvement. By optimizing these processes, companies can reduce costs, increase profitability, and better align supply chains with their strategic vision and goals. In addition, advanced insights beyond direct suppliers allow for more precise forecasting, planning, and resource alignment.
There are several key drivers for supply chain visibility, particularly in the context of sustainability management. In responsible procurement, it is crucial for companies to gain insight into the business practices of all their upstream suppliers, including those several tiers down the supply chain, where some of the most severe risks, such as forced and child labor, can occur.
This transparency enables companies to make informed procurement decisions and collaborate effectively with suppliers to enhance their overall sustainability performance.
Companies face increasing pressure from various stakeholders to make sure that not only their own business operations but also their supply chains uphold high sustainability standards. As more and more companies address their carbon footprint, they must increasingly focus on emissions across the entire value chain and at the product level. Multi-tier supply chain visibility empowers companies with a 360-degree view of these emissions and lays the foundation for meaningful climate action.
Efforts to accelerate the shift to a circular economy, which aims to minimize waste and maximize resource efficiency, also require companies to track materials and product components throughout their lifecycle. Digital product passports (DPPs), as envisaged by the EU, exemplify this approach. They represent a digital record of a product that contains information on its origin, materials and components used, and its embodied environmental impact.
Regulators around the world are raising the bar on supply chain sustainability compliance, increasingly demanding in-depth insights beyond direct suppliers. This includes policy-making related to due diligence, sustainability reporting, supply chain decarbonization, and product compliance.
Many regulations require companies to conduct thorough due diligence not only on their direct suppliers (tier 1) but throughout their supply chain. This encompasses the origin of raw materials, labor practices, and environmental compliance. For example, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) mandates that companies identify and mitigate human rights impacts and environmental damage across most stages of the value chain. The EU Deforestation Regulation (EUDR) specifically targets global deforestation and forest degradation and requires due diligence down to the lowest tiers of the supply chain, typically local farmers. Additionally, the EU Forced Labor Regulation (EUFLR) mandates that companies ensure forced labor does not occur at any stage of their upstream supply chains.
In the area of sustainability reporting, recent regulations have expanded the reporting scope to cover not only a company’s direct operations but also its entire value chain. The Corporate Sustainability Reporting Directive (CSRD) and the standards of the Global Reporting Initiative (GRI) oblige companies to disclose detailed information on the environmental, social, and governance (ESG) impacts of their business, including those of their suppliers. To meet these requirements and gather the necessary data on carbon emissions, resource use, and labor practices, companies need visibility into multiple tiers of their supply chains. Other widely used reporting frameworks such as the global ISSB standards or the CDP are moving in a similar direction. Efforts are also underway to align and harmonize the various initiatives.
A key component of many sustainability reporting frameworks, such as the Greenhouse Gas (GHG) Protocol, is the requirement to report on Scope 3 emissions. To accurately report these emissions, companies must have visibility into the activities of multiple tiers of suppliers, necessitating detailed data collection and monitoring beyond their immediate business partners. Reporting on Scope 3 emissions is increasingly mandated by regulators worldwide. This is partly driven by the growing adoption of ISSB standard IFRS S2, which requires the collection and disclosure of Scope 3 emissions data. Other regulations such as the EU’s Carbon Border Adjustment Mechanism (CBAM) equally oblige affected companies to gather upstream emissions data embedded in their products.
Certain regulations require the traceability of materials and substances contained in products, particularly in industries such as food, pharmaceuticals, and electronics. The European REACH Regulation (Registration, Evaluation, Authorization, and Restriction of Chemicals) mandates that companies monitor and manage chemicals throughout their supply chains. Other examples include provisions on PBT chemicals under the Toxic Substances Control Act (TSCA) in the United States or hazardous substances in China, and legislation on conflict minerals in the United States and the EU. Companies can only comply with these regulations if they have in-depth visibility into their supply chains.
It is increasingly evident that companies can no longer afford to monitor only their direct suppliers. Global supply chains typically involve multiple layers of suppliers, subcontractors, and distributors, often spread across different regions and countries. This complexity makes it challenging for companies to pinpoint critical supply chain nodes, collect data, and accurately assess sustainability risks. These difficulties are further exacerbated by large product portfolios, limited expertise, and strained resources.
To effectively manage these challenges, companies should deploy advanced technology solutions for supplier mapping, strengthen supplier collaboration and capacity-building, and implement robust due diligence processes that include risk management systems and regular audits. Leveraging actionable data insights and predictive analytics can also help.
The IntegrityNext Multi-Tier Supply Chain Visibility solution is designed to provide full transparency, mapping every tier from raw materials to finished products. It identifies critical risks and nodes in the supply chain and delivers much-needed visibility. The cloud-based platform draws on the world’s largest first-party supply chain sustainability data set and is powered by a purpose-built AI engine. Unlike other solutions in the market that rely on estimated or secondary data, IntegrityNext generates direct supplier insights, enabling companies to make informed decisions based on validated, reliable information.
The solution includes visualization and reporting tools that give procurement, sourcing, and category management teams accurate insights to drive smarter decisions, maximize impact, and increase efficiency. In addition, it ensures audit readiness and helps meet regulatory and due diligence requirements with minimal effort.
The 360-degree view of our solution elevates supply chain risk management to new heights. It leverages AI-driven supply chain mapping along with country and industry risk assessments to determine social and environmental risks associated with suppliers and materials. With the solution, you can:
Figure 1: The Multi-Tier Visibility Solution of IntegrityNext
IntegrityNext provides a comprehensive solution for identifying and mapping environmental and social risks across the entire supply chain. Key product features include:
To learn more about our solution and how we can assist you, please visit our website or schedule a personal demo with one of our experts.
August 2024
Collaborative approaches at all levels are a fundamental pillar of sustainability legislation around the world. Join us for an insightful webinar on how you can elevate supply chain sustainability through the power of collaboration.
May 2024
As both the EU Parliament and Council of the EU give the go-ahead for the Corporate Sustainability Due Diligence Directive (CSDDD), many companies will have to up their game to comply with the new rules.
August 2024
The EUDR imposes unprecedented due diligence obligations on companies to protect forests around the globe. The IntegrityNext EUDR Solution helps unravel the challenges and ensure compliance with minimal effort.
