Two thirds of UK businesses have no “plan B” to deal with a supply chain emergency, research by the Chartered Institute of Procurement and Supply has revealed.
And only 11 per cent of supply chain managers maintain a close relationship with their suppliers – an important way of preventing nasty surprises.
In fact, the research found direct evidence that the poor relationships between UK suppliers and procurers is resulting in regular disruptions to supply chains in the UK. Two thirds (67 per cent) of supply chain managers with strong supplier relationships up to tier three and beyond say they have avoided major supply chain crisis in the past twelve months. The proportion of supply chain managers with tier one supplier relationships only who claim the same is just 45 per cent.
CIPS chief David Noble said: “As UK companies are increasingly using suppliers in emerging markets to maintain their price competitiveness, they are becoming more exposed to reputational risks such as poor health and safety standards for workers or even enforced slavery, bribery and corruption, as well as environmental degradation.
“Having visibility and strong supplier relationships at the first tier of the supply chain is clearly no longer enough, as these risks do not always exist in the first tier, but often further down supply chains.”
The majority (56 per cent) of businesses with close supplier relationships up to tier three and beyond also have complete visibility of their supply chain, while businesses with relationships with tier one suppliers only, just 13 per cent.
Businesses with supplier relationships up to tier three and beyond are also three times more likely to be certain there is no malpractice in their supply chain compared to those with relationships with tier one suppliers only (49 per cent and 16 per cent respectively). At the same time, they are twice as likely to take responsibility for any malpractice in their supply chain (62 per cent and 32 per cent respectively).
“Best practice requires a thorough understanding by companies of who their suppliers are. Many procurement professionals will be confident they have this understanding, but this knowledge is incomplete. Professionals and buyers must have a licence to practise so business, and governments can be confident of where responsibility and accountability lies in purchasing decisions,” said Noble.