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25 November 2015

Poor supply chain management costing firms

Content team

Almost ten per cent of businesses are unaware of who their key suppliers are, which has lead to ineffective management of their supply chains, according to new research.

The report from the Business Continuity Institute (BCI) also showed that seven out of ten organisations admit they do not have enough visibility over their supply chains.

Half of these organisations' disruptions occur below the preliminary tier 1 supplier of goods, leaving it unclear as to where they are prioritised by their suppliers.

This could lead to instabilities with regards to managing the supply chain and will also make it difficult to minimise disruptions within the supply chain.

Statistics from the report showed that 74 per cent of organisations have been victim to at least one disruption over the past year.

Another 14 per cent of those recorded in the report had logged overall losses of at least €1 million (£706,000) as a result of these disruptions to their supply chain.

The top consequences of disruption to organisations included loss of productivity and customer complaints, which were recorded at 58 per cent and 40 per cent respectively.

Other consequences of disruption were increased cost of working, loss of revenue and impaired service outcomes.

As a result of supply chain disruptions, organisations are having business continuity arrangements in place, which has been costly on time and management.

Author of the report and senior research associate at the BCI, Patrick Alcantara, said that things weren't all negative as the report highlighted that, "good practice can mitigate the worst effects of these disruptions".

He continued to say that by taking a close look at supply chains and urging good practice, organisations and business leaders can stronghold their supply chains.

Content team, Bureau van Dijk

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