NZ companies ignore supply threats

18 December 2012
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29 December 2012 | Anna Reynolds

New Zealand businesses are failing to manage their supply risks while almost three quarters of procurement professionals do not receive formal training according to a survey by the Chartered Institute of Purchasing & Supply Australasia (CIPSA) and accounting firm Grant Thornton New Zealand.

The report, Procurement Risks in New Zealand, surveyed 200 organisations across New Zealand, 75 per cent of which have more than 500 employees and more than NZ$50 million (£26 million) in revenue. The survey revealed only 23 per cent of companies rated their level of risk management as high, while 73 per cent of procurement experts receive no formal training.

Jonathan Dutton, managing director of CIPS Australasia, said: “The public and private sectors must invest in professional procurement training for the people currently working in or joining the ‘supply side’. New Zealanders expect and deserve world class procurement practice – the risks are just too great without it for a country at the tip of the global supply chain.”

According to Ross Darrah, director of business transformation at Grant Thornton, further challenges are presented in overcoming the impact of disruptions on the supply chain. The report found during the past three years events such as the Canterbury earthquakes and Japanese tsunamis had an impact on two-thirds of organisations. The combined value of the impact across all companies in the survey is estimated at NZ$1.9 billion (£988 million).

Darrah said: “This issue of supply-side ‘risk’ is a real one for the country. Many of our businesses are reliant on a robust supply line and the consequences of any disruption can be far-reaching.”

The report stressed the need for businesses to formalise risk management training among procurement professionals and advised risk assessment and the planned response should be embedded in procurement processes. Supplier relationship management should also include on-going assessments and response to risk.

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