Why are BusinessesWasting 30 Billion on Supply Chain Bureaucracy

Why are Companies Wasting $30 Billion on Supply Chain Bureaucracy?

A lack of collaboration between companies and their suppliers is costing $30 billion a year.  

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, U.S., Spain, Brazil and The Nordics – saying that the domestic and international ‘arms’ of their organizations 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.

In the U.S. 32% work with other businesses in the same industry to manage information about suppliers, while the UK reports 31% and Brazil reports 23%.

“Across the world, businesses are spending $60 billion a year on managing information about their suppliers – half of which is wasted,” said Adrian Chamberlain, chief executive of Achilles, which commissioned the survey.

“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,” Chamberlain added. “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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