US firms ambivalent about supply risks

13 January 2010

13 January 2010 I Jake Kanter

Some of the biggest companies in the US are failing to take supply chain risks seriously, according to research.

A poll of buyers and other executives at more than 200 companies in the Fortune 1,000 uncovered poor standards on supplier risk management.

More than half of those surveyed kept less than 20 per cent of their supply base under active risk management. This was despite over 71 per cent reporting that the danger of vendors going out of business was their biggest concern.

Furthermore, over 62 per cent of the companies are involved in low-cost country sourcing, which nearly all the respondents suggested brought different challenges. For example, more than 41 per cent were concerned suppliers would fail to comply with regulations, while a further 21 per cent said product quality was at risk. 

The figures were described as alarming by Tim Albinson, chief executive of Aravo, the technology firm that commissioned the study. “As we saw in 2008 and 2009, supplier failures can lead to broader business failures, so this is a critical area for business leaders to get right,” he said.

The story is much the same in the UK, according to a separate report released earlier this week by research company Mactavish. It found that large companies have a poor understanding of supply chain risks they have acquired during the recession.

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