Supply chain disruption costs manufacturers £58m

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Large UK manufacturers lost more than £58m dealing with the fall-out from supply chain disruptions in 2013, according to a study commissioned by risk management specialist Achilles.

The total average cost of all supply chain disruptions was £105,000 per manufacturer.

The survey found that manufacturers were hit hardest in 2013 by suppliers failing to deliver the products of the required quality, which cost the industry an estimated £20.4m

The second most costly disruption was suppliers failing to deliver products on time, which cost £17.2m

Financial failure of suppliers cost the industry £7m, while suppliers exposing firms to litigation cost the industry a further £7m.

Some 61 per cent of manufacturers experienced failures to deliver on time, 42 per cent of which incurred a cost. The average bill per disruption was £55,000

Failing to deliver products of the required quality was slightly less common (54 per cent experienced this) but the average costs was higher – £91,000.

Despite the significant costs involved, 58 per cent of manufacturers said they were reliant to some extent on pieces of paper to manage information about suppliers.

Adrian Chamberlain, chief executive of Achilles, said: “This research shows that manufacturers are paying a heavy price for supply chain failures; many of which could be prevented.

“In our experience, efforts to improve information about the supply chain work best when whole industries – such as oil and gas – work collaboratively to agree and implement standardised requirements of all suppliers in terms of business critical areas, such as health and safety to reduce the burden of administration. They can then manage the information on a global, centralised database – implementing the same high standards not only in the UK but in every country in which they operate.”

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