Scottish firms 'lose £650m yearly relying on too few suppliers and customers'
Scottish businesses lose more than £650 million each year due to an over-reliance on a small number of suppliers and customers, according to a study.
Scottish businesses lose more than £650 million each year due to an over-reliance on a small number of suppliers and customers, according to a study.
KPMG Enterprise said the practice leaves companies exposed to price increases, quality control issues and bad debt.
The reliance on suppliers comes despite 41% of companies expressing concerns over their reliance and 38% experiencing a problem in their supply chain in the last year.
More than 220 UK companies with a turnover of more than £10 million were questioned in the study.
Half of respondents said the threat of losing large customers was their "most pressing day-to-day concern".
Phil Charles, head of KPMG Enterprise in Scotland, said: "Our research suggests that in their pursuit for growth, these leaders are leaving the back door open by failing to adequately address the many and varied risks that threaten their business.
"Whether related to customers, suppliers, data security or regulation, never has the adage 'fail to prepare, prepare to fail' rung more true - and the financial impact that this lack of preparation is having on business is startling.
"Relying on a small pool of suppliers is a particularly common vulnerability amongst middle market companies, yet we've seen many high-profile examples of organisations that have taken a substantial financial hit as a result of a fracture in their supply chain.
"And these fractures aren't solely caused by suppliers going bust.
"Ethical lapses such as poor working conditions, data security breaches, substandard production, a flouting of environmental regulations or irregular financial transactions can all translate into significant reputational - and ultimately financial - damage to the contracting business."