Uncertainty continues to impact supply chain risk, Dun and Bradstreet
A joint, quarterly report from Dun & Bradstreet and Cranfield offers a global outlook on the supply chain risks facing businesses in Q3 2019, with retailers seeing a slowdown in sales and manufacturers stockpiling goods in anticipation of the UK’s exit from Europe; the upcoming general election continues to add another layer of supply chain uncertainty.
Brexit has been the overall contributor to the marked increase in supplier criticality (up 2%) – the percentage of buyer-supplier relationships where the supplier is in a high risk country – and global sourcing risk (up 4.8%).
The other key metrics used to measure risk showed that:
- Supplier criticality is 1.2% higher than three quarters ago, at the end of December 2018
- This increase has been driven mainly by the construction, manufacturing, infrastructure and retail sector
- Foreign exchange risk increased slightly by 1% over the quarter, driven by increases in the manufacturing and infrastructure sectors
- Meanwhile retail and manufacturing saw the biggest challenges:
- In the manufacturing sector, significant increases across all four risk metrics saw Supplier criticality, financial risk, global sourcing risk and foreign exchange risk rise by 6.7%, 2.1%, 10.6% and 4.6% respectively
- The retail sector saw increases in supplier criticality and global sourcing risk of 5.4% and 2.7%
This compounds the already high levels of supplier criticality for the sector, which remain the highest of all seven sectors at 89%
It’s not just the impact of Brexit that effects supply chain risk management. Ongoing changes to the global economy and fluctuations in foreign exchange rates have added complexity to firms’ supply chains. For example, ongoing trade disputes have forced companies to shift their supplier bases to new markets.