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Two thirds of businesses not prepared for a supply chain crisis

Written by Adam Pescod on Wednesday, 24 June 2015. Posted in People

More than two years have passed since the horsemeat scandal but, as revealed by the Chartered Institute of Procurement & Supply (CIPS), a worrying number of companies are ill-prepared for another supply chain disaster

Two thirds of businesses not prepared for a supply chain crisis

The horsemeat scandal of 2013 offered a stark warning to businesses of all sizes about the importance of monitoring their supply chains. However, more than two years on from the crisis that engulfed some of Britain's biggest supermarkets and foodservice companies, it seems the UK is somewhat ill-prepared for another supply chain scandal. 

According to research from the Chartered Institute of Procurement & Supply (CIPS), 45% of businesses in the UK said they don't have a risk mitigation strategy that covers all levels of their supply chain, while a further 21% said they were unsure whether they have one. Ultimately, it means two thirds of British businesses are at risk of another supply chain emergency in the future. 

The research also revealed that just 11% of supply chain managers maintain a close relationship with their suppliers, with 65% saying they either have relationships with their tier one suppliers only or do not have any relationships with their suppliers at all. This is having a marked impact on supply chain operations in the UK. While 67% of businesses with supplier relationships beyond tier three said they have avoided a major supply chain crisis in the past twelve months, only 45% of firms with tier one supplier relationships could say likewise. 

Furthermore, over half of businesses with supplier relationships at all levels said they had complete visibility of their supply chain, compared to just 13% of businesses with tier one relationships only. Businesses with supplier relationships beyond tier three are also three times more likely to be certain there is no malpractice in their supply chain and twice as likely to take responsibility for any malpractice.

David Noble, group CEO of the CIPS, 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. We cannot allow even one more disaster to occur such is the urgency around these issues.”

While it might mean forking out for some long-haul flights, the price of not getting to know your suppliers doesn't really bear thinking about. 

About the Author

Adam Pescod

Adam Pescod

EB's former editor, Pescod was tasked with ensuring these hallowed pages are rich with excellent, engaging and error-free stories, all written with the entrepreneur in mind. Pescod previously plied his trade penning pieces about pubs and pints. He is also a sucker for alliteration. 

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