Supply chains left exposed to risk

13 December 2011

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13 December 2011 | Angeline Albert

The desire to cut costs in 2012 will result in leaner supply chains and leave companies more exposed to risk, according to forecasts by Progress Software Corporation.

The company said events such as the Thai floods and Japanese tsunami made businesses reconsider the level of risk exposure supply chains have when reliant on a small number of vendors. As a result, “organisations will attempt to avert risk by on-boarding new suppliers. However this will be a challenge as relationships and business trust are not developed overnight,” the company stated.

The company based its predictions on market trends seen among its 140,000 clients during the past 12 months.

Henry Hicks, industry vice president of supply chain at Progress, said that to be successful, supply chain managers needed to gain up-to-date visibility, understand the impact of events and react quickly. “Organisations that are able to quickly recognise changes in the supply chain and quickly implement a plan of action to circumvent the issue will be the real winners,” he said.

The company also forecast greater reliance on logistics firms for services such as warehousing. Companies will also make better use of information they gain from suppliers, such as inventory volumes, to improve supply chain planning.

The CFO is also expected to become more interested in supply chain activity because of the uncertain economic climate, as was anticipated last month.

 


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