CPO Strategy

74% of UK businesses encountered supply chain risk in the last 12 months

Supplier failure and supply shortages are the biggest risks, yet many businesses are unprepared to mitigate these events in the future

Research from Ivalua, a leading provider of global spend management cloud solutions, has shown that almost three quarters (74%) of UK businesses have encountered some type of supply chain risk in the last 12 months. The most common threats organisations faced include supplier failure (48%), supply shortage (46%) and environmental impact, such as pollution or waste (33%). A failure to mitigate supplier risk could have significant reputational and financial consequences, especially with the vast majority of UK businesses (92%) saying they have a high dependency on suppliers.

The research, conducted by Vanson Bourne on behalf of Ivalua, found that a majority of UK businesses (84%) say that the expanding supplier landscape is making it challenging to keep on top of risk. As a result, UK businesses are unprepared to mitigate supply chain risk, with 77% saying they do not have comprehensive and deployed contingency plans in place to prepare the supply chain for the impact of geopolitical factors such as tariff changes or Brexit. More than half of UK businesses also said they don’t have contingency plans in place for supply chain risk, including; natural disasters (68%), supplier failure (63%), the businesses environmental impact (63%), modern slavery (61%) and supply shortages (60%).

“Despite most UK businesses being exposed to supply chain risk in the last 12 months, it’s clear that many don’t have comprehensive plans in place in response to pressing threats such as geopolitical changes, supplier failure, and unethical practises such as modern slavery”, commented Alex Saric, smart procurement expert at Ivalua. “Without detailed contingency plans in place, UK businesses leave themselves open to risk factors which could cause customer dissatisfaction, damage corporate reputation and ultimately profits.”

Global supply chain causing challenges for risk management

The report finds that on average, UK businesses work with 2,598 suppliers – just over half of which (51%) are international – with organisations now trading across borders and accessing emerging markets. This is only set to increase further. The majority of organisations (58%) expect the number of suppliers they work with to rise, exposing them to more risk than ever before.

There are multiple barriers preventing UK businesses from mitigating supply chain risk. The vast majority (77%) face challenges gaining complete visibility into suppliers and their activities. 69% say they face challenges with supplier management because data is stored in multiple locations and formats; and two thirds (66%) of organisations face challenges assessing compliance amongst suppliers.

“It’s clear organisations need to overcome supplier visibility, data and compliance challenges in order to make informed decisions and strengthen contingency plans”, added Saric. “This can be done by taking a smart approach to procurement that will give UK businesses a 360-degree view of their supplier landscape and global operations. This will allow them to identify and prepare for potential risk in the supply chain, helping organisations make informed decisions and improve flexibility when the unthinkable strikes.”

To download the full report, “Risky business – how global supply chains have left organisations blind to risk”, please visit: https://info.ivalua.com/uk-risky-business-2019 .

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