Energy and resource costs top supply risks

Volatility in the price of raw materials is seen by multinationals as the greatest risk to their global supply chains, according to the latest research from PwC and MIT's Forum for Supply Chain Innovation

Of the 209 firms surveyed, 53% agreed that changes to resource cost was one of the greatest threats to their supply chain, outstripping the perceived risks of currency fluctuations (47%) or changes to business markets (41%).

Meanwhile, energy/fuel prices was ranked fourth in the list of risks, followed closely by environmental catastrophes and resource scarcity.

When asked about the impact of supply chain disruptions over the past 12 months, more than 60% confirmed that their company’s performance indicators had dropped by 3% or more as a direct result.

To cut the risk posed to supply chains, firms must invest in more flexible processes and work more collaboratively with upstream and downstream suppliers, concludes the report. “Companies consider alignment between partners in the supply chain as the most important factor in enabling risk reduction,” it states.

Meanwhile, EEF has confirmed that UK manufacturers are increasingly working with their suppliers to improve processes and develop products and services.

Its latest innovation survey, found that 66% of firms are collaborating on innovation with their suppliers – up from 48% in 2010.

The results also reveal that environmental standards and regulations are increasingly driving innovation among manufacturers. In 2010, just over 40% of respondents said that environment rules were a key driver for innovation. The 2013 figure is 45%.