Failure to mitigate supply chain risk could cost companies billions in 2012

Chief procurement officers at some of the world’s largest companies predict their businesses, unable to manage the risks affecting their global supply chains, will lose $AU187 million on average over the next 12 months as a result of supply chain disruptions, according to a recent report in the UK.

Commodity volatility, adverse weather conditions and a range of other threats featured heavily in 2011 and, despite the measures taken to combat these events, the sentiment among procurement executives is that 2012 could prove to be another costly year. When projected against the Global 2000 the total predicted loss amounts to $AU374 billion, according to research by the Procurement Intelligence Unit.

The research, which took in the views of 181 senior procurement executives from global companies in mid-2011, also showed that the procedures aimed at reducing the impact of unexpected events are limited. The majority of businesses assume that suppliers will take responsibility for managing supply continuity.

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