Customers, investors and regulators want answers about how products are made, who makes them and under what conditions, and verified evidence puts a business in a much stronger position to give those answers. That’s a real challenge when suppliers sit several steps removed from a business, often based in other countries with their own regulations, standards and priorities. But it gets much more manageable when a business narrows in on what matters most and builds its knowledge from there.
Where should a business start?
Trying to assess your whole supply base at once is overwhelming, and it usually stalls before it produces anything useful. A better approach is to map your supply chain and rank suppliers by the risk they pose to your business. That means risk to you specifically: the chance of disruption, reputational damage, regulatory penalties or lost contracts if something goes wrong with a particular supplier. Some suppliers, sectors and regions carry far more of that risk than others, so blanket screening spreads your effort too thin.
Start with your top suppliers, ranked by spend or strategic importance. That gives you a manageable group covering the relationships your business depends on most. High-spend suppliers matter, but so does a low-spend one your business can’t easily replace, like a single source for a critical component, or a supplier based in a high-risk region. Financial materiality means asking what a supplier’s failure would cost you, in lost revenue, operational disruption, remediation, legal exposure or reputational damage, not just how much you spend with them.
What should suppliers be measured against?
With your priority suppliers identified, the next step is deciding what good looks like. Environmental performance is one area to cover: for example emissions, waste, and water use may be priority topics to include. In the same vein, labour and ethical practices have to be considered with equal rigour as well, along with how each supplier is governed and held accountable. Aligning these criteria with a recognised framework such as UN SDGs and EcoVadis makes your requirements clear, measurable and easier for suppliers to act on.
A Supplier Code of Conduct is a natural way to set these standards out. It carries real weight when it includes specific clauses, audit rights and a defined process for corrective action. Customers and auditors look closely at whether a code is backed by these mechanisms, and suppliers take it more seriously when it is.
How do you find out what is really happening?
Actual figures make the most reliable starting point. A structured questionnaire sent to your priority suppliers should ask for real data on emissions, energy sources and waste practices, not assumptions. Desk research helps too as many suppliers already publish sustainability reports on their websites that answer some of your questions before you even ask.
Screen the responses for warning signs: missing or inconsistent data, emissions or waste that look high next to similar suppliers, unsafe or exploitative working conditions, or any failure to meet the standards you’ve set. This is what separates suppliers who are compliant on paper from those who are compliant in practice. It also shows you where deeper checks, like audits, site visits or worker interviews, are worth the time, and where a lighter check-in will do. A supplier scorecard can help rank the results and track progress over time.
But data only shows part of the picture. The people working in your supply chain see the real conditions every day. A grievance mechanism designed for the regions you source from gives them a way to raise concerns. It works best when it reflects local language needs and is genuinely accessible to the workers it’s meant for.
What should happen when a problem is found?
Cutting a supplier loose can seem like the obvious response. But ending the relationship often leaves the underlying issue in place, and the workers affected no better off. Remediation is usually the stronger route. A corrective action plan with clear timelines gives the supplier a fair chance to put things right, whether that’s safety upgrades, proper emissions reporting or better labour practices. Suppliers on a corrective action plan will undergo closer monitoring or more frequent auditing before they’re removed from the watch list. Removing a supplier should be a last resort, kept for cases where they can’t or won’t change.
Keeping a database of your key suppliers supports this work. Recording what you found, what was agreed and what changed builds a picture you can follow over time. It also means the knowledge stays with the business when people move on, and supplier governance is being properly managed by the business.
Should businesses be open about what they find?
Reporting honestly, including the difficult findings, builds more trust than presenting a spotless record. If you find an issue, say so, and explain how you resolved it. Customers, investors and regulators generally understand that every supply chain has problems somewhere. What they’re really looking for is evidence that the business is checking and acting on what it finds.
Is there a business case?
Yes. A business that understands its suppliers well can spot problems earlier, respond to disruption faster and answer questions with confidence. All of that protects revenue and reputation. Directing effort at the highest risks also means time and budget go where they’ll make the most difference, rather than being spread thin across a supply base too large to manage properly.
Every supply chain carries some risk. The real measure of success is how well a business understands where that business risk sits, how it works with suppliers to reduce it, and how openly it reports on progress. Starting that work now puts a business in a far stronger position than waiting until a customer or regulator asks hard questions with little time to answer.