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FTSE 100 firms 'need greater focus on supply chain'

21 October 2011

The UK's largest businesses are not paying enough attention to supply chain issues, according to a new report.

Research conducted by the Chartered Institute of Purchasing and Supply (CIPS) indicated that FTSE 100 firms currently prioritise other business areas such as risk management, sustainability and skills over their supply chain operations.

It suggested that although supply chain issues have recently become more prominent in annual reports, other topics continue to dominate the agenda.

Commenting on the findings, Nick Wildgoose of Zurich Insurance told Supply Management that FTSE 100 companies are "missing significant opportunities to improve performance through embedding supply chain management".

David Noble, chief executive of the CIPS, said the increased volatility of the global market means companies need to include more information about procurement and supply chain in their reports.

He cited this year's catastrophic earthquake and tsunami in Japan as an event that "prompted some urgent refocusing on the resilience of supply chains, not least for technology and automotive companies who saw the greatest impact".

Global supply chains were thrown into chaos in March by the natural disaster, which caused thousands of deaths and led to a crisis at the Fukushima nuclear power plant.

A number of technology firms and car manufacturers were hit particularly badly, as they rely on parts from suppliers based in Japan.

Many Japanese companies were forced to shut down production in order to conserve energy and soften the impact of power shortages on households.

The CIPS research found the organisations most likely to detail supply chain issues in their annual reports are those in the retail and consumer, aerospace and automotive, and food and drink sectors.

Mr Noble expressed surprise that technology companies appear to be paying little attention to supply chain operations, as the sector was ranked ninth out of the 13 industries analysed.

He pointed out that technology firms are now "even falling behind the media sector on supply chain reporting".

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Categories: Commercial

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