Beware Of Supply Chain Risks Where You May Not Be Looking

I recently came across an insightful article (Beware of Risk at Low-Tier Suppliers, Nov. 2011) that points to a growing need for procurement departments to increase their focus on sub contractors from main suppliers.

Referencing a global survey by the Business Continuity Institute, the article notes that about 85 percent of companies suffered at least one disruption in their supply chain, and 40 percent of those disruptions result from issues below immediate vendors. 

Some of my other key takeaways from the article:

• The survey found far-reaching and long-term consequences of these supply chain disruptions, including concern from shareholders (19 percent of respondents), reputational damage (17 percent) and increased regulatory scrutiny (11 percent).
• CIPS CEO had a great quote on the prevalence of these often-overlooked problems, noting that disruptions to supply chains are becoming increasingly common, with a high proportion happening further along the supply chain (second or third-tier suppliers), where many companies just aren't looking for issues.
• It highlights the need to create a balance between costs savings and the need to address disruptions and risk exposure so the cost savings aren't driven out in the process.

With so much at stake, it's important to take a comprehensive view of your entire supply-chain network. Remember, any player can become a key player, especially when it comes to potential risk of costly disruptions!

- L Srinivasan