Extending Management Upstream in Supply Chains Beyond Direct Suppliers

Companies' upstream supply chain beyond direct suppliers is receiving increasing attention from investors and customers, tightening regulation from governments, and growing interest from civil society. Buying companies' attention increases further upstream in their supply chain when critical material is being changed or limited without prior notice, quality becomes volatile, or prices fluctuate in unanticipated ways. In their attempts to extend their monitoring and control further upstream in their supply chain, many companies have come to realize the complexities and power issues that arise. That is, there are difficulties that arise when there is a lack of direct contractual relationships with suppliers of their suppliers. Also, companies are bound by their limited expertise in managing beyond direct suppliers. The challenges begin with ignorance about sectors, regions, or companies in which they lack familiarity, which frequently occurs when they seek to manage deeply into their upstream supply chain. This paper provides an overview of company challenges originating upstream in their supply chains beyond their first tier. It outlines current practices to influence organizations beyond direct suppliers, and gives recommendations on how to manage the supply chain upstream. This paper is meant to provide practitioners further insights into business practice for more effectively and actively monitoring and influencing subsuppliers.