Utilities could save billions by collaborating over their supply chains
Collaboration on tackling the administrative burden of managing supplier information could save utilities companies worldwide around $2.5bn a year, according to research commissioned by supply chain risk management specialist Achilles. In a recent survey, 82% of utilities firms said their domestic and international €~arms' require the same standards for suppliers in terms of health and safety, quality, sustainability, ethics and environmental issues.
However, only a third (34%) of utilities businesses said they work with other companies in the same industry to manage supplier risk, while two-thirds (60%) do not collaborate with other businesses to share the administrative burden of carrying out due diligence such as pre-qualification, regulatory compliance, verification and audits.
The survey was carried out by independent research company IFF, which interviewed 65 supply chain professionals from large power and utilities companies in the UK, Brazil, US / Canada, the Nordics and Spain.
The research comes as utilities bosses are crying out for streamlining of regulations affecting the sector. The survey found that 89% of power and utilities CEOs are concerned about the threat of over-regulation to their organisation’s growth prospects.
Richard Collins, global director at Achilles, said: “Across the world utilities companies are spending about $5bn every year managing supplier information. In our experience about half of that is being wasted. Power and utilities companies are struggling with an ever-increasing burden of regulation affecting their supplier base.
“Now is the perfect time for utilities firms to come together and share this burden of administration. Information about compliance is mandatory so there is no competitive advantage for any firm to work in isolation on collecting this data."
Collins said: “Our utilities communities across the world have seen it can be up to 10 times more efficient to establish common standards required of all suppliers in term of health and safety, ethics and compliance and then share the administrative burden of gathering, validating and auditing that information. This non-commercial data can then be shared through a secure, online portal. This means suppliers need only apply once to be eligible to work for all the utilities companies in the group.”
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