Beware of risks to supply chain

27 February 2009

27 February 2009

More suppliers will "cut corners" creating supply chain dangers during the recession, according to risk consultancy Aon.

And the problem may be worse in low-cost countries, according to Alex Hindson, head of enterprise risk management at Aon.

"You'll see (suppliers) trying to cut corners. You'll see them trying to subcontract or use temporary labour."

These issues could cause possible corporate social responsibility headaches for buyers and un-budgeted expenses for businesses, he said.

"Some of these companies (suppliers) are going to the wall. That means the threats are increasing in some of these outsourced supply chains."

Hindson was speaking as Aon launched its Political Risk Map, which identified potential supply chain risks in 42 per cent more countries in 2009 than last year. It warned that companies most likely to suffer disruption are those that rely on commodities and manufacturing.

SMfeb2009

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