Finance chiefs fear that supply chain risk is increasing

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The increasing interdependency of suppliers, partners and customers is causing concern among finance executives that commercial risks in the supply chain are also increasing, according to a report by software house Basware entitled “The Cost of Control – Disrupted Networks”.

The report surveyed 550 finance executives around the world, and found that 59 per cent think the visibility of supply chain activity and supplier payment is becoming more difficult due to the increasing complexity of the networks.

“64 per cent believe that the transparency of an open and collaborative supplier network helps to overcome some of these challenges and provides a more effective basis for sustainable cost savings than closed or exclusive network environments. To take advantage of this networked world and to work effectively, transparency for all parties and automation is key.”

The report said that buyers were beginning to recognise suppliers as equals and take into account suppliers onward commitments to their own suppliers.

“Concern, however, exists around the impact of tight credit lines and late or erroneous payment as it puts pressure on suppliers and directly impacts the buyer.”

Basware chief Esa Tihilä said: “Supply chains have become a complex web of commercial interactions and each organisation that is part of the network has a role to play in minimising commercial risk. Finance executives are aware that late or erroneous payments will create problems for their suppliers, yet late payments still exist.”

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