CEO of OCI Group says knowing your supplier’s supplier (KYSS) can help solve issues
THE CEO of a global supply chain procurement company insists that knowing your supplier’s supplier (KYSS) can support compliance with regulation, human rights in the supply chain and profitability.
The comments come after former European Central Bank President Mario Draghi’s long-awaited report on EU competitiveness was criticised for being ‘one-sided’. Various stakeholders have complained that not all voices from parts of Europe were included in his landmark 400-page report.
Draghi’s master plan to boost EU competitiveness includes regulation, such as the EU’s Corporate Sustainability Due Diligence Directive, which has caused a backlash as this requires organisations of a certain size to thoroughly vet their supply chain and value chain for sustainability and human rights.
But Oliver Chapman, founder of supply chain trade specialist OCI Group, has waded into the row and says that knowing your supply chain, from point of origin to consumer purchase, is essential for good business, as well as ‘doing the right thing’ and protecting human rights and stamping out child labour.
Mr Chapman said: “I don’t believe businesses need to choose between making profits and eliminating human rights abuses in the supply chain; rather, they support each other. Knowing your supplier is easy. But knowing your supplier’s supplier is harder, and knowing your supplier’s supplier’s supplier is harder still.
“Knowing your supplier’s supplier, or ‘KYSS’ as we call it, is an approach to create a detailed understanding of the supply chain for companies, not only the identity of the suppliers that make up the eco-system but a detailed understanding of their financial strength, status within their local community and position on human rights.”
Mr Chapman says OCI Group applies its KYSS formula to audit its supply chain for this exact reason. Following Brexit, the Covid pandemic in 2020 and the war in Ukraine in 2022, Chapman says applying the KYSS mantra has become about ‘managing risk’ and, more importantly, that businesses – through links in their supply chain – have done as much as possible to ensure that human rights are protected.
“Businesses need KYSS because a business that does not have a detailed understanding of its supply chain is vulnerable, and as the experience of the last few years has shown, vulnerable supply chains can not only create problems for businesses, they can also create challenges for the wider economy, too,” he said.
“Companies that do not apply appropriate standards of human rights pose a threat to the entire supply chain. This is about risk management. Risk is ever present in business, but KYSS allows companies to manage that risk. A side benefit of this might be creating an environment where regulation compliance is easier to achieve, but it is not the main benefit.”
