Global supply chains are a miracle of modern business. When things are running smoothly, it’s easy to take them for granted. But what about when things go wrong?
The last few years have been some of the most turbulent in recent memory. Brexit, the pandemic, and the war in Ukraine have all highlighted an uncomfortable truth - our supply chains aren’t as solid as we thought.
As business after business falls prey to supply chain disruption, it‘s easy to feel powerless. This is a big mistake. You may not be able to predict every economic shock, but there’s plenty you can do to spot supply chain risk. Some of these supplier risks will be immediately apparent, but others will take a bit of digging. This is where our supply chain solutions can make a big difference.
The weakest link
Traditionally, businesses have avoided potential supplier failure by building strong supply chain relationships. When you know your customer, you are more likely to anticipate problems on the horizon. There is still a place for this in modern business but, as supply chains grow larger and more complex, forging a personal relationship with every company is no longer realistic.
The collapse of Carillion in 2018 was the perfect illustration of this. Over 30,000 companies were left out of pocket and, for many, this came as a complete surprise. So complex were the supply chains involved, businesses downstream were unaware of their links to Carilion.
More recently, credit insurer Coface announced that it would no longer cover suppliers of Iceland supermarkets. Iceland emerged relatively unscathed, but this was another reminder of the precarious nature of modern business. Had Iceland been more seriously affected, its entire supply chain could have been destabilised. This would have harmed everyone from farmers to lorry drivers, many of whom have no direct links to the supermarket.
With the war in Europe and a cost of living crisis at home, these incidents will continue to happen. The only way to protect yourself is to be vigilant about the companies you work with. This means researching not just your customers and suppliers, but your customers’ customers and your suppliers’ suppliers. This is a lot to ask, but we have the tools to make it easier.
Better information means better decisions
Knowledge may be power, but it’s also protection. The more you know about a company, the easier it is to spot weaknesses in its business model.
UK companies have a significant advantage here. Companies House keeps detailed financial records on hundreds of thousands of businesses, but finding what you need is easier said than done. Records are saved as non-searchable PDFs, leaving you no choice but to trawl through them manually. Even if you have the time to do this, there’s a high chance of missing something vital. We felt that businesses deserved better, and that’s why we created SearCHeD.
SearCHeD is our very own Companies House search engine. We’ve converted hundreds of thousands of records into a searchable format, making it as easy to search a company’s financial records as it is to Google its opening times. This feature has many uses, but managing supply chain risk is where it really comes into its own:
- Expose supply chain weaknesses by searching for keywords indicative of risk. You can search the entire database, or filter the search by industry or location. This allows you to flag up companies with a high risk of failure before you introduce them into your supply chain.
- If you’re worried about a specific company, you can narrow the search to include its records only. You can also use the portfolio search feature to look for specific risks within your portfolio. This allows you to spot risks that are already present in your supply chain, and to take the necessary steps to protect yourself.
Dig deeper to avoid supply chain risk
SearCHeD is just one of the ways that we can help you to gauge supply chain resilience. If you are concerned about a supplier risk event, we have a tool to put your mind at ease:
- Forecast View™ lets you simulate a range of economic shocks to your supply chain. You can check how a particular supplier would fare in a range of scenarios, or you can see how you would be affected by the loss of a critical supplier.
- Our Experiments feature lets you dig even deeper by entering your own data and creating tailor-made simulations. Whatever the scenario, you can see exactly how it would affect your supply chain.
- Aphrodite® lets you match directors to their companies, even if this information is hidden. This gives you a better idea of who you are going into business with before you take on a new client or supplier.
By combining these features, you can shine a light on the darkest corners of your supply chain. For more information, or to arrange a free trial, don’t hesitate to get in touch.
