In Britain, The Uncertainty Of European Investment Is Focused On Higher Risk Suppliers.

According to the new report, Britain's continued uncertainty over Europe is prompting many manufacturers and retailers to consider purchasing to other low cost and high-risk countries to avoid trade barriers.

The Global Supply Chain Risk Report, CO compiled by Cranfield University of England and Dun (Bradstreet), found that the risk level of the supplier (Supplier Criticality) increased by 2% in the third quarter of 2019, and the global purchasing risk (Global Supplier) (increased by 4.8%) increased significantly.

The score of "supplier risk criticality" represents the relationship between buyers and sellers. Suppliers are regarded as key partners or important supply roles by buyers. This shows the company's dependence on suppliers. At present, the dependency ratio is maintained at 44.6%, which is 2% higher than that at the end of the second quarter.

At present, the retail industry has reached the highest score of 89% and increased by 5.4% in the third quarter, which means that the majority of the business relationship is regarded as a key partner or an important supply role. This shows that the supplier is highly dependent and exposed to risks.

At the same time, the global purchasing risk index is 7%, rising from 6.7% to 7% in the second quarter, an increase of 4.8%.

According to the assessment of Dun & Badstreet, "global procurement risk" represents the ratio of buyer to seller relationship, and the "country risk" of the supplier country is higher than or equal to 4.

The market value of manufacturing and retail businesses exceeds 8%, indicating that their suppliers have a higher proportion in high-risk countries. Therefore, compared with other industries, they may face more risks and fluctuations in the global market. In addition, in the last quarter, the risk of global procurement increased in the two industries, with the largest growth rate in manufacturing sector (10.6%). This indicates that buyers have more and more willingness to purchase from low cost and high-risk countries.

Heather Skipworth, an associate professor of logistics, purchasing and supply chain management at Cranfield University, said that the lack of a clear policy on possible trade tariffs and other non-tariff barriers would lead companies to find alternative sources of procurement.

European manufacturing industry is facing the uncertainty brought by the "Britain off Europe", which encourages many enterprises to find suitable supply sites and take more risks, mainly to avoid possible trade tariffs and other non-tariff barriers, such as quotas, embargoes, sanctions and taxes. As choices become more restrictive, they are likely to increase risk perception and dependence on suppliers.

"As wages rise, China is no longer a low cost manufacturing country with attractive purchasing power. More and more companies are looking for alternative and high-risk countries such as India, Bangladesh, Vietnam and Romania. "

Chris Laws, head of the UK product and strategy analysis, added: "2019 has been a challenging year. The third quarter analysis points out that manufacturing continues to be at the highest level of global procurement risk. The good news is that companies can take measures to mitigate such risks. A comprehensive understanding of the relationship between supply chains and cooperation with multiple suppliers with multiple locations will help industry identify and mitigate the risks of reputation and operation. "