Realizing that one or, dread the thought, many of your suppliers are high-risk may seem like the end of the world. And frankly, it totally could be if you obsess about it rather than act on it. There is a long laundry list of options to attack the situation, but it eventually boils down to two – either go check what’s up with your guy or get a new one.

What you decide is not as important as why you make said decision. Sure, I get it, changing a supplier is an absolute force majeure situation, but it doesn’t need to be as scary. It is all down to costs. If it will cost you more to go check the situation on the ground than to change the supplier (which can truly be exuberantly pricey), then go for the change.

If you suspect the check will prove your high-risk rating is not mitigatable, try to assess how you ended up with this supplier and avoid making the same mistakes when choosing the new ones.

So, what does it mean to “go check”? This isn’t just about sending an email. The EUDR’s due diligence requirements for high-risk suppliers are explicit and legally binding. If your supplier is in a country or region flagged for high deforestation risk, your responsibility to verify their claims skyrockets.

Option 1: Enhanced Due Diligence and Mitigation

This is the path of enhanced due diligence. You must implement concrete measures to reduce the identified risk to a “negligible” level. This means going far beyond a simple due diligence statement.

• Request More Information: Ask for proof of land tenure, permits, or other legal documents. These documents should verify that the land is legally owned and used for its stated purpose.
• Conduct Independent Audits: You might need to hire a third party to conduct an on-the-ground audit of the supplier’s operations. This is crucial for verifying their practices and ensuring they meet the “legally produced” standard.
• Leverage Technology: This is where a modern approach pays dividends. Use advanced satellite imagery and remote sensing tools to verify that the geolocation data provided by your supplier is accurate and that the land has indeed been free from deforestation since December 31, 2020. This allows for continuous monitoring without constant travel and can provide a level of verifiability that a single site visit cannot.
• Implement an Action Plan: Work directly with the supplier to create a time-bound plan to address any gaps. This could include helping them formalize land ownership, shift to more sustainable practices, or implement better on-site controls.

This path requires a significant investment of time, money, and resources. But if the supplier is a critical part of your supply chain and the relationship is worth saving, this can be the most effective long-term solution.

Option 2: Sourcing a New Supplier

Sometimes, the cost of mitigation is simply too high. Whether it’s the cost of verification or the unlikelihood of a supplier being able to change their practices, a clean break may be the only sensible option.

This decision is not without its own risks. It can lead to:

• Supply Chain Disruption: Finding a new, compliant supplier takes time and effort. You might face sourcing gaps or delays.
• Increased Costs: The new supplier might come at a higher price, reflecting their investment in sustainable, traceable practices.
• Starting from Scratch: You will have to go through the full due diligence process all over again, from initial screening to contract negotiation.

The EUDR provides a clear choice: either invest in a more resilient supply chain by mitigating risks with your current partners, or make a clean break for a fresh, more compliant start. Neither path is easy, but both are essential for long-term success.

This is where a purpose-built solution becomes invaluable. n’entropy was designed to provide the intelligence you need to make these critical decisions with confidence. By centralizing your data, automating risk assessments, and providing real-time satellite monitoring, our platform empowers you to quickly verify your current suppliers and seamlessly onboard new, compliant ones. We help you navigate this crossroads, so you can transform a moment of crisis into a strategic opportunity.