SHORT HILLS, N.J., Nov. 16, 2017 /PRNewswire/ -- Political
uncertainty and natural disasters from across the world failed to
weaken global supply chain risk in Q3, according to the Chartered
Institute of Procurement & Supply (CIPS) Risk Index powered by
Dun & Bradstreet.
The CIPS Risk Index fell for the third consecutive quarter to
80.3, down from 81.3 in Q2, despite global political uncertainty
and the ongoing renegotiation of long-standing trade deals, such as
the North American Free Trade Agreement (NAFTA) and the UK's
membership of the European Single Market.
Despite recent falls, the Q3 score is only slightly below the
Index's all-time high of 82.6 in Q4 2016. The Index, produced by
Dun & Bradstreet for the CIPS, tracks the impact of economic
and political developments on the stability of global supply
chains.
Although the damage caused by Hurricane Harvey in the US had a
localised impact on supply chains, the weather event did not have a
discernible impact on the global supply risk index, with
North America's contribution to
global risk decreasing from 7.0% in Q2 to 6.8% in Q3.
The largest drop in risk was in Western & Central Europe, where a series of stabilising
political outcomes helped to reduce the region's contribution to
global risk from 24.7% in Q2 to 23.9% in Q3. The formation of a
government in Macedonia following
months of political deadlock and the abandonment of street protests
by the opposition Democratic Party in Albania helped to stabilise the region and
reduce risk.
On top of this, the EU Free Trade Agreement (FTA) with
Canada came into force in
September, eliminating many taxes and duties on goods traded
between the EU and Canada. The EU
also appeared to make progress in talks with Japan and Indonesia about FTAs in the future.
However, political risk around the world continues to threaten
to spill over into the economy and impact supply chain risk. This
is particularly significant in the US, where the lack of clarity
from the US Administration around trade deals could impact
Asia, with the US threatening to
pull out of a major trade deal with South
Korea. The renegotiations of the NAFTA trade deal with the
US, Mexico and Canada will also further impact the supply
stability of the region in the coming months.
John Glen, CIPS Economist
said:
"Although supply chain risk has fallen for three
consecutive quarters, it remains close to its all-time high and
businesses must prepare accordingly. In a period of prolonged
supply chain risk, it's crucial that businesses have a network of
alternative suppliers when disruption inevitably hits.
"The outcomes of various ongoing negotiations, such as Brexit
and NAFTA, could change the face of global trade and cause
significant disruption to supply chains in the future. This could
cause delays, increase costs or reduce the quality of supplies
businesses have access to, so it is now more important than ever
for businesses to have robust contingency plans in place."
Bodhi Ganguli, Global Leader
and Lead Economist at Dun & Bradstreet, said:
"The Global Supply Risk Index score improved for the third
straight quarter, falling from 81.3 in Q2 2017 to 80.3 in Q3. While
the sustained improvement in the GRI is a positive for global
supply chains, the index remains in high-risk territory. The Q3
reading is only slightly below the all-time high of 82.6 in Q4
2016. To put this in perspective, the average GRI score over the
last four quarters (Q3 2016 to Q3 2017) was 81.5, while the average
for the ten years 2006-15, which included the Great Recession, was
62.3.
"Political risk is the common theme in supply chain risks
across most of the world in Q3, and will remain so in the near
term. Increased political risk brings with it impediments to the
implementation of the right growth-friendly policies. While it is
true that global growth is on a much firmer footing globally than
it was a year ago, government policy will be ever more important,
particularly as central banks across the advanced economies
begin/continue their slow but steady withdrawal of monetary
stimulus."
Notes to Editors:
About the CIPS Risk Index, powered by Dun &
Bradstreet:
First launched in April 2014, the
CIPS Risk Index, powered by Dun & Bradstreet, is a composite
indicator of pressures acting upon supply chains globally. The
Index analyses the socio-economic, physical trade and business
continuity factors contributing to supply chain risk across the
world, weighting each score according to that country's
contribution to global exports.
The Index helps sourcing professionals understand the risks to
which their supply chains are exposed, articulate questions and
scenarios for key suppliers, inform assurance activities, check the
readiness of contingency plans, support the negotiation of risk
transfer in contracts, and establish factors which may impact the
financial stability of tier one and sub-tier suppliers
upstream. Regular production of this Index will help
procurement and supply professionals communicate and justify
risk-informed sourcing decisions and support effective Supplier
Relationship Management.
About the Chartered Institute of Procurement &
Supply:
The Chartered Institute of Procurement & Supply (CIPS) is
the leading international body representing purchasing and supply
management professionals. It is the worldwide centre of
excellence on purchasing and supply management issues. CIPS
has a global community of 115,000 in 150 different countries,
including senior business people, high-ranking civil servants and
leading academics. The activities of purchasing and supply
chain professionals have a major impact on the profitability and
efficiency of all types of organisation and CIPS offers corporate
solutions packages to improve business profitability.
www.cips.org, @CIPSnews.
About Dun & Bradstreet
Dun & Bradstreet (NYSE: DNB) grows the most valuable
relationships in business. By uncovering truth and meaning from
data, we connect our customers with the prospects, suppliers,
clients and partners that matter most, and have since 1841. Nearly
ninety percent of the Fortune 500, and companies of every size
around the world, rely on our data, insights and analytics. For
more about Dun & Bradstreet, visit DNB.com. Twitter: @DnBUS
Contact:
Deb McBride
Dun & Bradstreet
mcbrided@DNB.com
973 921 5714
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SOURCE Dun & Bradstreet