By July 8, 2015 Read More →

Survey Says Risky Supply Chains a Big Challenge

Xchanging plc, a business technology and services provider, has issued more results from its 2015 Global Procurement Study, which focus on external threats and challenges to the supply chain.

The research reveals the greatest external challenge for 94% of businesses’ operations is supply chain risk, with more than three quarters (77%) of respondents saying it’s a challenge, and 17% reporting it’s an “extreme challenge.”

Around two thirds of respondents claim to be challenged by regulation and audit (71%); lack of supplier innovation (63%); and fluctuations in currency (58%) in their business operations.

With the high number of respondents challenged by supply chain risk, the research dug further into the specific supply chain threats faced by European and North American businesses. More than a quarter of respondents (28%) see currency and exchange rate fluctuations as a significant external threat. This jumps to 35% in respondents from mainland Europe, with the Euro still under pressure against the Pound and other major currencies, and nervousness in the region over Greece’s debt negotiations.

More than a quarter of respondents (26%) also cite oil prices as a major external threat to their businesses, with global oil prices having fallen sharply in recent months (by more than 40% since last summer), leading to significant revenue shortfalls in many energy exporting nations and concerns about oversupply in some markets.

One in five respondents feel their operations are threatened by purchasing power laws and regulation, tax and the Eurozone crisis. Unsurprisingly, the percentage citing the Eurozone crisis as a threat jumps to more than a third (34%) in respondents from mainland Europe. 81% of respondents also claim organizational spend cuts are a challenge, again most likely due to the Eurozone crisis and ongoing austerity in companies operating in the region.

Chirag Shah, Executive Director, Xchanging Procurement, said: “All major economic crises affect cost, availability and competitive positioning within procurement and the supply chain. By implementing predictive modelling technology platforms that asses each risk, and building contingency plans, organizations gain greater visibility and control of their full supply chain. This allows companies to manage a greater proportion of spend (especially at the tail end), meaning these risks, and their potential to damage businesses, can be significantly reduced.

“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.”

The international study surveyed 830 procurement decision-makers across the UK, Europe and North America.


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