@Risk

I expected the percentage to be low, but when the final results were calculated, I have to admit, my jaw dropped.

In a recent survey of financial, procurement and risk executives who participated in Aravo’s supply chain risk webinar series, we found that:

• Even though well more than two-thirds (71.4 percent) of those polled said that their biggest concern continues to be risk of supplier financial viability, more than half have less than 20 percent of their supplier base under active risk management.

“More than half have less than 20 percent of their supplier base under active risk management?” That’s an alarming statistic –particularly now, when for the past few years we’ve seen headline after headline about how supplier failure can lead to business failure on a global scale.

That response from our survey participants says screams to me that corporations need a wake-up call. They need to realize that it is critical for any company depending on suppliers –whether here, there, or anywhere –to implement supplier risk management solutions that are comprehensive and proactive.  Why? Because if you want your company to successfully compete in today’s unpredictable and complex global marketplace, you need supplier risk management strategies that: 1) reduce the possibility of supplier failures and supply disruptions, 2) improve supplier performance management, and 3) enhance supplier compliance initiatives.

There’s no doubt about it: Robust supplier risk management systems are becoming increasingly essential as supplier networks become more fractured and multifaceted. And, interestingly, our survey of more than 200 Fortune 1000 companies also revealed that:

• Businesses are continuing to explore opportunities to maximize budgets by adding more suppliers in emerging markets.  Nearly one-third (31.2 percent) of survey participants are “heavily penetrated in emerging markets.” A equal percentage (31.2 percent) has “already sourced some suppliers in emerging markets and are looking to expand low-cost country suppliers in 2010.”

• Not surprisingly, the top concern around suppliers in emerging markets is regulatory compliance (41.7 percent), followed by the financial viability of these suppliers (33.3 percent).  Only 25 percent of those polled were concerned about product quality.

I’ll continue to keep you updated on new results as they come in. Polling will continue during Aravo’s next webinar on January 27th titled, Managing Supplier Compliance and Performance Risk: Top Indicators Every Company Should be Tracking. For more information or to register for this webinar, please click here.