Majority of firms see supply chain risk as a challenge
A recent Xchanging Procurement report involved a survey of 830 procurement professionals across the UK, North America and Europe. It found that 77 percent of firms see supply chain risk as a challenge, while 20 percent of them saw it as an “extreme” challenge. The report elaborated that a multitude of factors must be taken into consideration such as: where a company is doing business, where a company’s suppliers are doing business and the location of the suppliers’ manufacturers.
A second set of results coming from the Xchanging´s Global Procurement Study 2015 found that oil prices were a threat for 26 percent of the firms, with the Eurozone crisis at 20 percent and supply chain fraud at 15 percent. The executive director of Xchanging Procurement Chirag Shah identified that expanding ones supplier base and not depending on one supplier is vital to mitigate against external threats. It also helps to know who supplies the supplier, as this allows firms to have control over the entire buying process.
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Are Uber-inspired delivery services a threat to DHL?
Morten Villberg, DHL´s managing director to the Nordics and the UK believes that Uber-inspired delivery firms such as Nimber (launched in Norway) and Trunkbird (launched in Denmark) indicate the differing customer expectations and needs of customers. Delivery firms Nimber and Trunkbird use a social platform to connect clients wanting to send items with people willing to deliver them on their journey.
Daniel Nyvang, the co-founder of Trunkbird, stated that the company is more focused on the C2C market in order to meet the high fragmentation that lies within deliveries. As a counter argument, Morten Villberg indicated that DHL is prepared to offer social delivery services if the end customers want it. He also mentioned that firms like Nimber and Trunkbird are unable to compete in terms of pricing, but they can provide benefits such as carrying parcels up stairs.
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Partnering with suppliers cuts supply chain risks
According to global consulting firm Strategy&, suppliers and manufacturers need to be partners in order to minimize the risks of a globalized supply chain disruption. The recent recall of millions of cars due to the defects with the airbags supplied by Takata indicates the effects of relying on a lean supply chain model. Reid Wilk, the Managing Director at Strategy&, stated that in the car industry, material costs constitute between 50 and 70 percent of the entire product. Therefore it is imperative to manage the supply chain well.
Wilk believes that a partnership approach best assures that proper processes are in place to deal with any recalls, as no one supplier is big enough to deal with the liability of a major recall. He elaborates that a firm can have a handful of major partner suppliers, and agree to source product for the lifetime of a product program if they meet quality, technology, delivery, performance and cost targets. By doing this, a win-win situation is created, whereby suppliers and manufacturers work together for longer and can design products earlier on in the manufacturing process.
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Have a nice weekend!
