Survey finds suppliers’ finances are the biggest worry
One out of ten construction businesses believes most of their suppliers are “high risk” and could damage their business significantly if they got into trouble, according to a new survey.
The poll, carried out by procurement consultancy Achilles, defined high risk suppliers as those whose financial difficulties, failure to deliver, or lack of compliance with legislation or regulation would cause significant cost or reputational damage to the company using them.
The survey of 200 firms, including 30 construction companies, also found 17 per cent of firms in the industry thought 11 to 50 per cent of their suppliers were “high risk”.
The results were broadly similar to other sectors with a high reliance on subcontractors including utilities, mining and quarrying.
Nearly a third of construction firms said their biggest worry about their suppliers was the state of their finances, 20 per cent said failure to meet quality, timeliness or cost requirements was their key supply chain concern, and 17 per cent said suppliers’ health and safety regimes caused them the most anxiety.
The report said firms became more vulnerable to failure in their supply chain as they outsourced more work and expanded further across the globe.
Achilles’ chief executive Adrian Chamberlain recommended that firms vet their suppliers thoroughly. He said: “Verification of information supplied by suppliers is critical. The consequences of a high risk supplier failure could result in financial losses, litigation, or reputational harm to the brand of the purchasing organisation. Such damage can directly impact share value.”