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Global businesses wasting $30BN on supply chain bureaucracy

Global businesses wasting $30BN on supply chain bureaucracy

23 Feb 2015

Global businesses are wasting more than $30 billion a year on managing critical information about their suppliers – because they’re failing to work together on tackling the administrative burden.

In a market survey, only a third of large firms in the utilities, manufacturing, mining, construction, engineering and oil and gas sectors said they work collaboratively with other similar businesses to carry out due diligence on suppliers.

This is despite 88% of these companies – located across the UK, USA, Spain, Brazil and The Nordics – saying that the domestic and international ‘arms’ of their organisations require the same standards from suppliers in terms of health and safety, environment, quality, sustainability and ethics. In fact, many businesses rely on the same suppliers.

Regional differences

The Nordics – comprising Sweden, Denmark and Norway – fared best for collaboration out of all regions surveyed. Just over a third (37%) of businesses said they work with other firms in the same industry to manage information about suppliers. Spain was last – with less than one in five (18%) of firms sharing the administrative burden with their counterparts in industry.

Do you work with other businesses in the same industry to manage information about suppliers?

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Research was carried out by independent research consultancy IFF, which conducted telephone interviews with supply chain professionals from 300 large businesses.

The survey was commissioned by Achilles, which operates 11 online platforms across the world, allowing buyers and suppliers to share critical regulatory and compliance information – but not commercials. Suppliers in each industry create online ‘profiles’ of their compliance and risk management information, which are visible to all businesses in that sector. It means suppliers’ information is only submitted, validated and audited once on behalf of the whole sector.

Adrian Chamberlain, Chief Executive of Achilles, said: “Across the world, businesses are spending $60bn a year on managing information about their suppliers – half of which is wasted.

“It is much more efficient when whole industries agree common standards required of all suppliers in terms of health and safety, ethics and compliance; then share the administrative burden of collecting, checking and auditing information. They can make details available to the whole industry on a central online portal.”

“We see many firms are still nervous about sharing supplier information with competitors – but this information is not commercially sensitive. There is no ‘competitive advantage’ in collecting mandatory compliance and regulatory information.”

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