Supply chain risk 'a challenge' for nearly eight in 10 firms – survey

Will Green is news editor of Supply Management
12 July 2015

The biggest external challenge faced by businesses is supply chain risk, according to a survey.

In a report Xchanging Procurement said supply chain risk was seen as a challenge by 77 per cent of firms, and as an “extreme” challenge by almost one in five.

Around two-thirds of respondents said regulation and audit was a challenge, followed by lack of supplier innovation (63 per cent) and fluctuations in currency exchange rates (58 per cent).

The second set of results from Xchanging’s Global Procurement Study 2015 found oil prices were a threat for 26 per cent of firms, along with tax (20 per cent), the eurozone crisis (20 per cent), political risk (17 per cent) and supply chain fraud (15 per cent).

The report, which involved a survey of 830 procurement professionals across the UK, Europe and North America, said CPOs must “proactively consider the implications of these risks on the running of their businesses”.

“They need to take into account a multitude of factors including where they are doing business, where their suppliers are doing business and where their manufacturers are located,” said the report.

“What is the volatility of that location? What is the political stability, the currency stability and the stability of the workforce within that location?”

Chirag Shah, executive director of Xchanging Procurement, said: “All major economic crises affect cost, availability and competitive positioning within procurement and the supply chain.

“Widening your supply base and not relying on one supplier is also essential to mitigate against external threats. Increasing access to more suppliers for sourcing projects on a global and regional scale will remove pressure and dependency on one source. Dealing with more than one supplier, and knowing who supplies them, will give you control over the entire buying process.”

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