The five pillars of a supply chain due diligence

​In today's economic landscape, responsible supply chain management represents an imperative for companies across all sectors. The growing complexity of global supply chains, combined with the evolution of international regulatory frameworks, makes the implementation of structured due diligence systems indispensable.

Supply chain due diligence is no longer merely a competitive option, but an operational necessity that addresses regulatory compliance requirements, reputational risk management, and long-term corporate sustainability.

An effective due diligence system is structured around five interconnected phases, each contributing to building a robust and sustainable framework.

Step 1: Establish solid management systems

The first step involves implementing an internal governance system that clearly defines responsibilities, procedures, and operational standards. This includes:

• definition of clear and communicable corporate policies that establish guiding principles for supplier selection and management;
• structuring of dedicated teams with specific competencies and defined responsibilities;
• implementation of control systems that ensure traceability and transparency throughout the entire supply chain;
• development of effective communication mechanisms with all involved stakeholders;
• measurable improvement plans aiming to promote gradual performance enhancement within reasonable timeframes;
• grievance and reporting mechanisms, allowing employees, suppliers, or third parties to raise concerns or flag risks within the supply chain;
• document retention and management systems, ensuring the organized storage of information and the traceability of decisions;
• continuous improvement processes, to ensure alignment with evolving legal and operational requirements.

The solidity of this phase determines the effectiveness of the entire due diligence process.

Step 2: Identify and assess risks in the supply chain

Risk mapping is the core analytical step of the process. This phase requires:

• systematic analysis of the supply chain, identifying all levels and interconnections;
• assessment of geographical, sectoral, and operational risks associated with each supplier;
• classification of suppliers based on risk profile and strategic importance;
• identification of potential vulnerabilities in terms of regulatory compliance, environmental sustainability, and social responsibility.

The objective is to obtain a complete and stratified view of the risks present in the supply chain.

Step 3: Design and implement response strategies for identified risks

Once risks are mapped, it is necessary to develop specific and measurable mitigation strategies:

• report the progress and findings of your due diligence Management System to senior management, including key metrics and risk mitigation updates.
• devise and implement a measurable risk management plan with suppliers, including steps for improvement and criteria for terminating non-compliant suppliers.
• request additional facts or risk assessments from suppliers as needed for mitigation or after changes in circumstances to ensure ongoing risk management

The effectiveness of this phase depends on the ability to balance operational pragmatism and methodological rigor.

Step 4: Conduct supply chain due diligence audits

The audit system represents the verification mechanism for the effectiveness of implemented measures:

• planning of risk-based audits, with frequency proportional to each supplier's profile;
• use of standardized methodologies that ensure comparability and objectivity of results;
• involvement of qualified resources, internal or external, with specific competencies;
• systematic documentation of results and necessary corrective actions.

Audits must be conceived as tools for continuous improvement, not mere formal compliance.

Step 5: Report on supply chain due diligence

The reporting phase completes the cycle, providing transparency and accountability:

• preparation of structured reports for different stakeholders (management, investors, regulatory authorities);
• communication of progress achieved and challenges still open;
• definition of specific KPIs to monitor system effectiveness over time.

Reporting must balance transparency and confidentiality, providing meaningful information without compromising business competitiveness.

The importance of an integrated approach

The effectiveness of a due diligence system depends on the ability to integrate these five steps into a fluid and iterative process. Each phase must feed into the subsequent ones, creating a continuous improvement cycle that adapts to the evolution of the operational and regulatory context.

Companies that successfully implement these systems not only reduce operational and reputational risks but often discover optimization and innovation opportunities previously unidentified.

How van Berings supports companies in supply chain due diligence

The increasing complexity of international regulations and the need for effective due diligence systems often require specialized legal support. van Berings helps companies throughout the entire process of building and managing supply chain due diligence, combining solid expertise with a practical approach. This ensures solutions that satisfy both compliance requirements and business goals, based on a clear understanding of sector specifics and each client’s unique operations, to provide tailored and effective advice.