Supply Chains in the Congo: Is there blood on your brand?

July 23rd, 2009 · by Justin Fogarty ·

Earlier this week, the UK based NGO Global Witness released a scathing report linking several British companies with the violent conflict in the Democratic Republic of Congo (DRC). As reported by the Associated Press, “some companies that obtain cassiterite (tin ore), coltan, gold, and other minerals used in devices such as mobile phones and computers purchase them from traders who work with rebels and soldiers who exploit civilians in the Democratic Republic of Congo.” The human toll in the press reports is disturbing and graphic. And the damage to the implicated brands has been done (and continues to spread at a shocking rate over Twitter and other social media sites).

But, how can a company avoid such situations, where a supplier or their suppliers further down the chain inflicts damage upon the eventual OEM’s brand and thus bottom line? After all, no company or consumer wants to their money funding brutal conflicts abroad. However, prevention requires a careful eye on all of the links in the supply chain.

Director of Global Witness, Patrick Alley, summed up the responsibility he and many consumers believe companies must have:

“It is not good enough for companies to say they buy only from licensed exporters, when they know full well that their middlemen buy from armed groups.”

Therein lies the crux of the criticism these companies are facing. Could/should they have known that further down their supply chain the money they spend on materials was funneling back into fueling this long running conflict?

Obviously, SPM, automation, close communication with suppliers, clear understanding of expectations between buyers and suppliers all the way down the supply chain would help. But in a case like this in the Congo, a known conflict zone, more must be done to protect the company against risk.

The focus should be on regions, suppliers or direct materials where the most supply risk is present. For example, spend more time on DRC suppliers than those in Iowa. But in those areas deemed risky, you must dive deep into potential issues. Ignorance is not bliss. It can come back to haunt you.

And there’s another cautionary lesson to be learned here and that’s the blistering pace that bad news can spread. If there’s one thing that’s been facilitated by much heralded web 2.0 technology, it’s sharing. When that news being shared - via Twitter, Facebook, email, IM, Digg, etc - is bad news with your brand attached to it … you’ve not only missed your chance to reduce your supply chain risk. You’ve also missed any opportunity to get out in front of the PR nightmare that’s dominating online discussions and search engine traffic for your brand.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.