The most common impact of supplier failure identified in the research was financial, with 30 per cent of firms reporting a loss in revenue or business partners. Other impact areas reported by more than 22 per cent of buyers were higher insurance premiums, damaged reputation/loss of customer trust and significant legal/regulatory fines.
The most worrisome risk factors for suppliers were found to be security (ensuring data security and privacy standards) and information risk (accuracy, timeliness, and security of information exchanged with suppliers).
Despite this, only 23 per cent of buyers have achieved ‘mature’ supplier-related processes, which involve them monitoring and analysing their suppliers with clear data. When asked about their approach to conduct due diligence on suppliers and ensuring compliance with regulations and corporate social responsibility (CSR) policies, just 12 per cent of businesses scored the highest level of ‘optimised’ maturity, which sees processes being constantly monitored and improved to maximise performance.
Low process maturity, revealed in more than a third of businesses (35 per cent) operate on an ad hoc or non-existent basis, with no consistent set of processes for dealing with suppliers or way of measuring expenditure with them. It was found to lead to poor sourcing decisions, due to the lack of high-quality up-to-date information.
Rick Hurwitz, Tungsten Network’s CEO comments, ‘Today’s digital world affords buyers and sellers the opportunity to more effectively use their data and manage their interactions. It is vital that businesses are able to effectively use their data and manage their suppliers. Both buyer and suppliers in our study shared a host of challenges in meeting their company’s objectives, including increased cyber fraud, siloed customer data, insufficient cash for investment, and legacy technology systems. Clearly, many businesses are struggling with inadequate processes and supplier failure is hitting the bottom line.’