Better Supply Chains with Better Contracts

June 3, 2022

Do you remember the toilet paper panic buying scenario during the onset of the pandemic? 

Since the beginning of the pandemic, supply chains have been making headlines. The supply chain struggles have affected most of us in one way or another. And if you’re following up on what’s going on with the baby formula shortage right now, it’s an undeniable fact that supply chains significantly impact our society and economy. 

Supply chain strains are caused by various factors, from shutdowns and the rising cost of production, to trucker issues, warehouse, and worker shortages, reduced inventories, inflation, and a whole lot more. 

From a business standpoint, this could become a major problem over time – and contracts play a huge role in improving your supply chains while reducing the risks involved.


Ways to Improve Your Supply Chains


  1. Diversify your portfolio contract with diverse suppliers. 

Supplier diversity has long been recognized by multinational corporations as offering significant value to businesses.

Benefits of supplier diversity include:

  • Reduced supply chain risk
  • Increased access to diverse and new markets
  • Improved brand recognition

How to diversify your portfolio contract:

  1. Hire a diverse supplier manager or management team.
  2. Create and implement a framework for measuring key metrics and gathering data.
  3. Build a network of diverse suppliers.
  4. Include provisions that require mutual feedback and supplier contracts. 
  5. Consider requiring suppliers to meet your diversity requirements (ex. minimum number of underrepresented workers, subcontracting to a minimum percentage of diverse suppliers, or paying a certain minimum wage, etc.)


  1. Reduce the risk of forced labor.

Businesses face an increasing risk of products being detained due to forced labor in the supply chain so be sure to take steps to increase transparency.

Ways to reduce the risk of forced labor:

  • Get in touch with your manufacturers and suppliers to establish where they source their raw materials. 
  • Regularly review your supply chain contracts and ensure they offer adequate protection from forced labor. 
  • Include minimum standards for labor conditions in your contracts.
  • Prohibit sourcing of products in these high-risk areas. You can even require your supplier to obtain raw materials from pre-approved sources only. 
  1. Reshore certain lines. 

Reshoring production involves bringing production, which was previously offshored, back to your local area. While it’s (likely) unrealistic to bring all production back to your local area,you could establish smaller supply chains locally for production areas that are key to your company’s viability. 

Key factors for success in reshoring lines:

  • Increase in modularity
  • Greater collaboration and communication
  • Increased flexibility in your supplier contracts


Transparency is Huge

Finally, we can’t stress enough the importance of having transparent communication with your potential purchasers. 

Transparency helps you meet your compliance obligations and it also better manages your consumer expectations thereby maintaining trust, protecting your brand, and reducing complaints or negative reviews.

If you want to learn more about how to improve supply chains with better contracts, check out


The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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