Supply chain risk moves up the agenda

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Retailers and manufacturers are increasingly focusing on risk in their supply chains, according to KPMG’s latest global CFO Consumer Markets survey.

The current economic uncertainty is cited by nearly half of respondents (44 per cent) as the biggest risk that these global consumer companies face. This is followed by political instability (27 per cent) where recent clashes have been seen in China and the Far East over large scale job cuts.

Consumer companies also cite supply chain issues as presenting one of their greatest operating risks in emerging markets. Recent examples include the explosion of the Fukushima nuclear plant in Japan, the political upheaval in Asia, floods in Thailand and earthquake in New Zealand.

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The report “Turning global risk into an opportunity” surveyed 350 senior finance executives in the retail, food, drink and consumer goods manufacturing industry.

It found that companies are showing greater appetite for risk reviews, as finance leaders and their boards meet more frequently to discuss the key risks. Weekly risk reviews more than doubled from just over 7 per cent to 19 per cent compared to two years ago, with fewer than 6 per cent now conducting reviews annually.

“Both manufacturers and retailers with their diverse distribution networks and complex supply chains are often exposed to a wide-variety of risks, especially those operating internationally; traditionally, however, they have been less inclined to undertaken risk reviews at an enterprise-wide level,” said Gerry Penfold, risk consulting partner at KPMG.

“More regular communication with senior colleagues on risk issues will lead to greater resilience at a time of increased uncertainty and more tangible assurance for the board.”


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