Monday, December 14, 2009
While businesses claim supply chain risks merit a high priority at board level, many still underestimate the potential impact of these risks and face a challenge in terms of expertise in this critical area of risk management, according to a new study.
"Managing Supply Chain Risk for Reward" is a new report from the Economist Intelligence Unit (EIU). Based on a survey of 500 global executives with responsibility for risk management, it examines how companies are being affected by supply chain risk and how they are responding to it. It survey results find that while many companies are working on strategies to boost the efficiency and resilience of their supply-chains, many struggle to effectively manage the risks associated with suppliers at a strategic level.
Respondents to the survey clearly identified the impact of the global recession on their supply chain over the last year. More than half said they had been affected by rising input costs and swings in energy prices, while a third said that the insolvency of partners or suppliers had caused disruption. 62% of those questioned cited the inability to predict future demand for their products as a major issue and 59% said they had been adversely affected by exchange rate fluctuations.
Looking ahead, almost 40% of respondents saw continuing unfavorable exchange rates as the key concern for their supply chains in 2010. This was followed closely by fears over input price increases and energy price hikes. Declining customer confidence, the introduction of protectionist measures by governments and further supplier insolvencies were also seen as challenges. To address these issues the majority of respondents said their organizations were taking significant steps to increase the resilience of their supply chain. Two thirds of respondents said they were initiating risk assessments of key suppliers while over half said they were working to improve collaboration with their partners and suppliers.
Improving the efficiency of their supply chains is also a priority. In an effort to contain costs, over 57% of respondents reported that they had negotiated lower prices from suppliers over the last year and over a third claimed to have sought increased efficiency from their logistics and increased their reliance on outsourcing. Over a third planned to move from single to multiple suppliers.
The survey was completed in September and October 2009 by the Economist Intelligence Unit. 500 executives responsible for risk management in their organizations were surveyed. The survey was completed by respondents employed in a range of sectors, including financial services (17%), manufacturing (13%), professional services (10%), energy and natural resources (7%), IT and technology (7%), healthcare and pharmaceuticals (7%) and consumer goods (6%). Companies in Asia-Pacific accounted for 33% of the responses, followed by 29% in Western Europe and 28% in North America. About one-half the respondents were C-level executives or board members.
View the complete report.
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