Eight in 10 firms suffer supplier failure

posted by Danny Mitchell
18 July 2017

Some 84% of businesses have suffered supplier failure over the last three years, according to a report.

Unclear supplier management processes and fragmented data are holding back firms. Research released by Tungsten Network showed that bottom lines were hit the hardest as 30% reported a loss of revenue or business partners.

Over a fifth of buyers blamed supplier failure for higher insurance premiums, damaged reputation, loss of customer trust and significant regulatory fines.

The challenges for businesses posed by cyber fraud, siloed data and insufficient cash distract from important priorities, said the report. Customer service, product quality and operational agility suffer as a result, quickly followed by profits.

Most buyers’ approach to due diligence with suppliers exposes them to risks. A lack of defined relationships, aggregation of information and methods of measuring expenditure led to poor sourcing decisions, said the report.

“Today's digital world affords buyers and sellers the opportunity to more effectively use their data and manage their interactions,” said Rick Hurwitz, Tungsten Network’s CEO. “It is vital that businesses are able to effectively use their data and manage their suppliers.”

The majority of organisations lacked the visibility, training and accountability to succeed in the digital age, said Tungsten.

Outdated supply chain management systems struggle to stay ahead of the challenges faced by supply chains today. Utilisation of the available technology to streamline their processes is imperative for growth.

“Clearly, many businesses are struggling with inadequate processes and supplier failure is hitting the bottom line,” said Hurwitz. “They need to be properly managed using modern tools and processes that establish accountability, reduce uncertainty, and foster trust.”

The study did highlight aspirations to improve supply management. A third of respondents said that improving technology and collaborating with suppliers was a top priority. A quarter intended to aggregate and analyse data sources to improve context and decision-making.

More than 600 businesses from the UK, US, France and Germany took part in the study, including 400 buyers at large companies with more than 1,000 employees, and 200 suppliers who earn more than half their revenue by supplying large companies.

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