Problems with suppliers costing small businesses

The knock-on effect of resolving problems with suppliers is costing UK business more than £10 billion every year, research finds.

The knock-on effect of resolving problems with suppliers is costing UK business more than £10 billion every year, research finds.

The average time spent by employees rectifying problems caused by suppliers falling short of promised standards costs UK business the equivalent of 0.7 percent of UK GDP, according to a study by the Institute of Customer Service.

UK employees spend on average 4.7 hours a month addressing problems with suppliers, however delving deeper into the figures reveals the true cost to business could be even higher.

Senior managers and directors are disproportionately more likely to be responsible for dealing with supplier issues, increasing costs by diverting their focus from growing their business to deal with suppliers, according to the survey of more than 2,000 people.

Nearly 60 percent of executives earning over £100,000 a year spend on average more than one day a month dealing with the consequences of suppliers getting something wrong.

This number falls to less than 28 percent for executives earning between £90,000 and £90,999, and drops even further to under 5 percent of people earning between £10,000 and £19,000 a year.

The findings suggest that the more one earns, the more time is spent on dealing with the consequences of suppliers getting something wrong.

Jo Causon, CEO of the Institute of Customer Services says that resolving customer and supplier issues is consuming a significant amount of senior executives’ working week – time that could be spent on developing new and innovative services which drive growth.

‘With so many organisations operating complex supplier networks, the quality of relationships with both customers and suppliers is central to improving an organisation’s performance.

‘The Institute of Customer Service consistently demonstrates that organisations that focus on proactively managing their relationships with customers and suppliers achieve higher customer satisfaction, which translates into improved business performance. This research highlights the tangible impact on business’ bottom line.’

After almost six years of economic uncertainty, the UK economy looks increasingly to be recovering from the financial crisis, Causon adds.

‘But in order for this to be sustainable excellent customer service must be inherent in every part of the value chain. Both public and private organisations must focus on customer service and engage everyone in their workforce to reduce the drag on economic recovery.’

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