"Frightening" Picture for Global Suppliers

Panjiva, an objective information source on global suppliers, recently released an engaging analysis that highlights the dramatic impact of the economic downturn. 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 percent in just three months; from 22,099 suppliers in July to 6,262 suppliers in October.
• Of those factories still active in October, 40 percent are now on the Panjiva Watch List as a result of suffering a year-over-year drop of 75 percent 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.

Panjiva CEO Josh Green says 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,” he warns.

He’s hardly alone in this assessment. According to Aberdeen Research’s July 2008 survey and report on Supply Chain Risk Management, 58 percent of companies surveyed “suffered financial loss because of supply chain disruptions.”

How then, do shippers identify supply chain risk before it turns into supply chain disruption?