Supply Chain Due Diligence
Process of investigating and managing risks in supplier supply chains; covers modern slavery, financial standing, security, and quality.
Definition
Supply chain due diligence is the process of investigating and managing risks in supplier supply chains across modern slavery, financial standing, security, quality, environmental impact, and other risk areas. Public sector contracts increasingly require evidence of supply chain due diligence at the bid stage and ongoing throughout delivery. The depth of required due diligence scales with contract risk profile: critical infrastructure and personal-data contracts need substantially deeper due diligence than routine commodity purchases.
How it works in practice
Effective due diligence is risk-based and tiered. Direct suppliers (tier 1) get the most scrutiny: financial standing checks, compliance certifications, modern slavery statements, anti-bribery policies, technical capability evidence. Indirect suppliers (tier 2 and beyond) get progressively lighter scrutiny based on risk: a tier 3 supplier in a high-risk category (raw materials from high-modern-slavery-risk geography) gets more scrutiny than a tier 2 supplier in a low-risk category (commodity packaging from established UK supplier). Due diligence approaches include: written questionnaires to suppliers; review of supplier documentation (statements, certifications, audit reports); third-party intelligence (compliance databases, sanctions lists, modern slavery risk indices); site visits and audits for higher-risk suppliers; ongoing monitoring through contract management. The Modern Slavery Act 2015 has driven substantial investment in supply chain due diligence: many UK companies now operate dedicated due diligence teams and use specialist intelligence services (Sedex, Achilles, EcoVadis) for systematic supplier assessment. The Procurement Act 2023 supplier conduct regime increases visibility of supplier performance; supply chain due diligence informs both bid-stage selection and ongoing contract management.
Common questions
How deep should supply chain due diligence go?
Risk-based. Direct (tier 1) suppliers get the most scrutiny across financial, compliance, modern slavery, security, and quality dimensions. Indirect suppliers (tier 2+) get scrutiny proportional to risk profile. High-risk categories (high-modern-slavery-risk geography, security-sensitive components) need deeper indirect-tier scrutiny than low-risk commodity categories.
What due diligence intelligence services are commonly used?
Sedex (supplier ethical data exchange), Achilles (sector-specific supplier intelligence including UVDB for utilities and JOSCAR for defence), EcoVadis (sustainability ratings), Refinitiv World-Check (sanctions and PEP screening), Modern Slavery Registry (statement publication record). Mature programmes use multiple services with risk-tiered application.
How is supply chain due diligence evidenced in bids?
Through written description of the due diligence framework, named senior responsible, intelligence services subscribed, recent due diligence outcomes (issues identified, action taken), and ongoing monitoring approach. Strong bids evidence due diligence as a live programme with recent outputs, not as a policy document gathering dust.