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Recent developments 'increasing awareness of procurement risk'

29 February 2012

The unstable nature of global supply chains in recent months has increased companies' vigilance over properly managing risk factors affecting procurement.

Ed Ainsworth, managing director at supply chain solutions specialist 4C Associates, told attendees at the recent Economist CFO Summit that commodity volatility and supply chain disruption are becoming major issues to chief financial officers.

Factors affecting this trend include the ongoing poor health of the global economy and natural disasters such as last year's Japanese earthquake and flooding in Thailand, which made supplies difficult to obtain in many cases, reports Supply Management.

Mr Ainsworth also flagged up the risk that more localised disruptions can cause, such as fires at a supplier's factory.

He added that firms must also consider "the risks associated with working with other companies in their supply base", as most companies "have 60 per cent of their spend with suppliers".

This comes after another report from procurement services provider Achilles earlier this month revealed that a large number of UK businesses are reliant on supply partners whose collapse or failure to deliver would cause significant damage.

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Categories: Functional Practices, Procurement & Supply Chain

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