01.09.13
Why supply chain maps could prevent the rail industry from having its own horsemeat scandal
Source: Rail Technology Magazine Aug/Sept 2013
Annette Gevaert, Director of Rail and Transport at Achilles, describes a worrying lack of knowledge among businesses about their supply chains – and what can be done about it.
Rail companies should create maps of their supply chains to prevent an ‘industry version’ of the horsemeat scandal. Research shows that 40% of businesses procuring only in the UK have no information about their suppliers’ suppliers. Despite this lack of information, 92% felt ‘confident’ in their ability to manage potential issues.
Achilles runs Link-up, the supplier registration and pre-qualification scheme for the industry. The company commissioned an independent survey of 130 procurement professionals working in a wide range of sectors – including rail and transport – to ascertain their key supply chain challenges.
Achilles runs Link-up, the supplier registration and pre-qualification scheme for the industry. The company commissioned an independent survey of 130 procurement professionals working in a wide range of sectors – including rail and transport – to ascertain their key supply chain challenges.
Results showed that:
• 40% of companies procuring only in the UK – including the rail and transport sector – had no information about their tier 2 suppliers
• 18% of all companies – including those in the rail and transport sector – had no information about tier 2 suppliers
Annette Gevaert, Director of Rail and Transport at Achilles, said: “Like most businesses, the rail sector is now dependent on increasingly complex and globalised supply chains.
“Rail is a safety critical industry, with people at its heart, and we must take proactive steps to address potential risks in supply chains before they affect people, planet and profit. The horsemeat scandal unfolded in a different sector but the same issues – caused by a lack of supplier visibility – could easily affect the rail industry.
“Our research suggests that businesses do not know who their tier 2 suppliers are and yet they remain ‘confident’ in their risk management processes – without the benefit of a complete picture of information. This suggests that procurement professionals are either unaware of the risk posed by tier 2 suppliers, or overly complacent in their existing systems. By creating maps of supply chains across all tiers the rail industry could gain visibility and traceability of potential risks and act as a role model to other sectors.”
The situation is also reflected among SMEs. A third (30%) of companies with a turnover below £25m have no information on their suppliers’ suppliers, compared to only 13% of companies with a turnover of over £1bn.
Edward Funnell, rail policy spokesperson for the Chartered Institute of Logistics and Transport, said: “This study should come as a wake-up call to rail companies and the Institute welcomes the fact that this research has been undertaken.
“While many companies take good care to ensure their suppliers comply with high standards of care to ensure that products are safe, how many are checking the levels of compliance with quality and safety standards of their suppliers’ suppliers?
“Many ‘tier 2’ suppliers may well be excellent providers, but as recent events have shown, when it comes to the manufacture of safety-critical products, companies who procure products from their suppliers need to ask questions of their suppliers’ suppliers too. Dented reputations, safety scares, unwanted media attention and additional financial and legal costs are much costlier than taking a little time to carry out checks on those who supply your suppliers.”
Achilles provides Supply Chain Management and Supply Chain Mapping services. This allows companies to maintain accurate data and ‘map’ their extended supply chains, to view supply information beyond tier 1 suppliers.
An automated ‘cascading invitation’ from buyer to supplier to supplier’s supplier ad infinitum gathers comprehensive information about the supply chain, protecting buyers from global events and allowing best practice in the mitigation of risk.
* Research was conducted on behalf of Achilles by IFF Research in March 2013 amongst 131 directors, procurement managers and buyers of large UK businesses with over 250 employees.