Supplier failure impeding small businesses
Poor supplier management and security issues are holding back UK businesses, according to a new study into business practices.
According to the research from Forrester Consulting, done on behalf of Tungsten Networks, 84% of businesses have faced supplier failure in the past three years.
It also revealed that many supply chains are not yet fully capable of meeting the needs of consumers, which inhibits growth and increases risk.
Nearly a third of firms affected said that they had noted a loss of revenue or business partners, while 22% of buyers said they faced higher insurance premiums, significant legal or regulatory fines or damage to their reputation as a result.
Security was also a major issue, with many business voicing concerns over how data and privacy standards are maintained.
Problems around the accuracy and suitability of information being exchanged have also caused issues for firms.
Under a quarter of buyers have ‘mature’ supplier-related processes in place, which includes regularly monitoring and analysing data to enhance overall performance.
Meanwhile, just 12% said that they ensure due diligence and compliance with corporate social responsibility policies.
Around 35% of firms said that they operate on an ad hoc basis and revealed that they lack a consistent process when dealing with suppliers.
With many businesses reliant on digital, the management of processes and data is key to making sure that supplier failure does not hit the bottom line.
However, the study suggests that many businesses are struggling with issues in their supply chain, despite trying to find solutions with payment processes or via the use of invoice financing.
Constantly facing financial loss from within the supply chain severely limits a firm’s ability to grow, although a range of alternative financial options do exist to offer support.
Similarly, if debts are allowed to build up, a business can find itself in an insecure financial position, which may ultimately push a company towards administration or other financial measures.
A third of the firms taking part in the study said they intend to implement better technology for collaborating with suppliers in the coming year.
By Phil Smith