Source : Procurement Leaders
Increasing levels of interdependency across complex global supply chains are creating significant new business risks, a new report has claimed.
Global finance executives are becoming more concerned that the interdependency between suppliers, partners and customers are resulting from increasingly complex supply networks, according to the second phase of The cost of control - disrupted networks, which was commissioned by e-invoicing company Basware.
Published yesterday, the poll of more than 550 CFOs and other top finance executives around the world, notes that there is concern about the impact of tight credit lines and late or erroneous payments, which put pressure on suppliers and buyers. According to the report, finance executives believe 15% of invoices remain unpaid past their payment terms, even though two-thirds understand late payments cause problems for their suppliers. A further 38% acknowledge that their late or erroneous payments to suppliers impact the suppliers’ commercial performance to the same degree as it would their own business.
Finance executives indicated they are also concerned about the visibility of activity within the supply chain. Almost two-thirds think the visibility of supply chain activity and supplier payment is becoming more difficult due to the increasing complexity of the networks. Some 64% believe that the transparency of an open and collaborative supplier network helps to overcome some of these issues.
On the plus side the report noted that buyers are beginning to recognise suppliers as equals and are taking into account suppliers’ future commitments to their own suppliers.
When asked about the most significant challenges of making improvements to purchase-to-pay (P2P) systems, 46% of finance executives state the lack of flexibility of the systems and the disruption to complex supplier networks caused by changes to these systems. However, 62% claim that connecting disparate parts of the purchase and payment process within their businesses will be critically important in the next 12 -- 24 months.