Hidden Transportation and Logistics Costs of Supplier Non-Compliance

Supplier Non-Compliance: A Form of Disruption You Can Proactively Manage

Retailers and manufacturers are increasing their supply chain complexity, while at the same time focusing on reducing procurement, transportation, and logistics costs.1 According to a recent supply chain survey conducted by IDC, 58% of consumer products manufacturers and 65% of high-tech companies outsourced some portion of their products, and this percentage is expected to increase as companies expand into new countries.

Other recent studies cite regulatory compliance to be the top global supply chain concern, and navigating country regulations as a top barrier to global expansion.2 To help with effective distribution in an expanding number of regional markets, retailers as well as manufacturers increasingly rely on thirdparty logistics (3PL) providers to handle international transport of their products.3 This strategy enables companies to both reduce distribution costs and mitigate risk of damage or spoilage, and thereby contribute to their primary business objectives.

However, the rise of global sourcing as a means to minimize costs has had the unintended consequence of increasing risk. Dependence on an increasing number of suppliers makes it difficult to monitor their performance without automated metrics. In addition, unforeseen environmental, political, and economic crises can stop a supply chain in its tracks. In fact, according to a 2013 Supply Chain Resilience Survey,4 75% of organizations experienced at least one supply chain disruption incident in the past year.

While organizations can create plans for responding quickly to unpredictable, uncontrollable disruptions, they can do even more to greatly reduce the likelihood of disruptions caused by supplier noncompliance. It is notable that 42% of the disruptions reported in the Resilience Survey originated below the tier one supplier; 37% of these were due to “outsourcer service provision failure.”

This eBook provides a list of key areas to monitor for supplier compliance, and the hidden financial impacts of non-compliance on your transportation and logistics costs. It also suggests solutions you can implement to increase supplier compliance and your supply chain’s resiliency, thereby decreasing a host of costs associated with disruptions

READ THE FULL ARTICLE BY DOWNLOADING BELOW.