Survey on Risk Handling in the Manufacturing Industry

A current report by KPMG shows that international manufacturers are increasingly considering effects of supplier selection on cost and potential risks. Nearly 200 companies participated globally in the survey. The full report can be downloaded here at KPMG, I just summarized the major findings.

Results

• Reintegration: Every third manufacturer has reintegrated formerly outsourced processes into his own organization again. Furthermore about 40% are considering reintegration to lower cost and risks.
• Single Sourcing: About 40% of the companies want to reduce the number of suppliers in the next two years. About the same number stated that they are planning to design their contracts with longer time horizonts
• Disruptions: Companies are increasing their activities on contingency planning in case supply is disrupted.
• Risk Aversion: The authors conclude that manufacturers may be avoiding many risks completely thereby reducing their chances as well.

Conclusion

From a research point of view these results can be viewed as the basis for further in depth analysis. In a footnote I found an interesting remark, that the complete study has been conducted by an external contractor: the Economist Intelligence Unit. I am not really sure if this increases or decreases the credibility and validity of the results.