How Risk Management tools may revert decline of global suppliers

Panjiva released today a startling analysis that highlights the dramatic impact of the economic downturn on global suppliers. Panjiva’s analysis of the apparel industry in the second half of the 2008 reveals staggering statistics, including:

• The number of suppliers actively serving the U.S. market dropped over 70% in just three months; from 22,099 suppliers in July to 6,262 suppliers in October.
• Of those factories still active in October, 40% are now on the Panjiva Watch List as a result of suffering a year-over-year drop of 75% or more in volume shipped to U.S. customers.
• The Panjiva Pain Index, a measure of the risk present in the global supply chain, stood at 43 at the end of October, up from 24 at the end of July.

According to Panjiva CEO Josh Green, “These numbers paint a frightening picture of the state of the world’s suppliers. U.S. companies who maintain their customer base through the economic downturn may nevertheless find their survival threatened by the disappearance of their supplier base.”

Earlier this year, Aberdeen Research released a report on Supply Chain Risk Management which pointed out that 58% of the companies that took part in the study suffered financial loss because of supply chain disruptions”. No wonder vendor risk assessment has become an essential part of IT Governance, Risk and Compliance tools.