Invisible Links of Global Supply Chains: Dealing with Unauthorized Subcontracting

• The risks posed by unauthorized subcontracting in the consumer goods industry

• Why suppliers resort to unauthorized subcontracting

• Best practices to achieve greater transparency and continuous improvement in your supply chain

Unauthorized Subcontracting: the Plague of Global Sourcing

Despite the progress in sustainable sourcing made by major brands and retailers in the past decade, the consumer goods industry is still rife with cases of unauthorized subcontracting, where the contracted manufacturer outsources parts of, or even whole orders, from a factory that isn’t formally a part of the buyer’s supply chain. Such facilities are often informal, unregistered, and with working conditions ranging from substandard to unsafe, abusive, and illegal.

In addition to causing obvious harm to the workers, unauthorized subcontracting can be a very painful issue for the buyers. On one hand, it creates the image of a brand that fails to scrutinize its supply chain; on the other, a business a company that cannot ensure that its products are actually produced in the approved factories is essentially throwing away its CSR budget.

The reasons behind unauthorized subcontracting

While unauthorized subcontracting is a global problem, and each country affected by it has a unique set of circumstances, from China’s labor shortages to Turkey’s host of refugees, a number of factors notably contribute to the problem:

• Tight shipping deadlines and high penalties for delays

• Intentional overbooking as a standard business practice

• Cost saving

• Changing buyer demands

• Macro factors, including government policies and positive/negative incentives for certain industries

Download this whitepaper to discover actionable strategies to significantly reduce the risk of unauthorized subcontracting in your supply chain, increase transparency, and protect your brand reputation.