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26 February 2012 | Adam Leach
One in 12 UK businesses believe more than half of their suppliers are at risk of financial failure, failing to deliver or causing the buying company significant financial or reputational damage.
The research, carried out by IFF Research on behalf of procurement services provider Achilles, found of 200 UK companies with more than 250 employees, eight per cent think the majority of their supply base represent a high risk to their operations.
Adrian Chamberlain, CEO of Achilles, said: “High risk suppliers are worryingly prevalent in the current economic climate, at a time when businesses need transparent relationships and absolute security of supply. De-risking should be the order of the day. In part this is about ensuring that new suppliers are vetted appropriately. It is also about assessing the risks during the contract and ensuring that controls are in place.”
In addition, the research found a further 18 per cent of respondents believed between 11 and 50 per cent of their supply chain were a high risk.
In September 2011, a report by the Business Continuity Institute found more than a third of supply chain disruptions emanated from vendors to suppliers. The global survey found that 40 per cent of disruptions were a result of issues below immediate vendors.