Executive Briefings

Supply Chain Risks Continue to Trouble U.S. Tech Industry, Study Finds

Interruptions and impediments to supply chain operations continue to rank among the greatest concerns for U.S. technology companies, according to an annual report issued by BDO USA, an accounting and consulting organization. Eighty-eight percent of tech companies cite concerns over reliable suppliers, vendors, distribution of products and services, as well as the global distribution chain.

This marks the third consecutive year that supply chain concerns have increased (75 percent in 2010 and 86 percent in 2011).

The 2012 BDO Risk Factor Report for Technology Businesses, which analyzes the most recent SEC 10-K filings for the 100 largest publicly traded technology companies in the U.S., also found that natural disasters and other geopolitical issues pose a serious threat to supply chain management and operations. In fact, 88 percent of companies cited those risks in this year's study, up from 81 percent in 2011.

With business interruption top of mind, more tech companies (73 percent versus 68 percent in 2011) are worried about the maintenance of their infrastructure and information systems. Notably, 71 percent of tech companies cited breaches in security as a major risk, up 25 percent from 2011. The popularity of e-commerce and increased use of mobile devices are contributing to this concern.

"A rise in supply chain and business interruption risks was expected after the fallout from the 2011 Japan earthquake, floods in Southeast Asia and other natural disasters," said Aftab Jamil, partner and national leader of the Technology & Life Sciences practice at BDO USA, LLP. "The effects of these incidents extended so deeply into the technology industry and served as a reminder of the fragility of even the soundest supply chain. As tech companies continue to grow and extend their footprint globally, supporting and securing operations is paramount for success."

Source: BDO

This marks the third consecutive year that supply chain concerns have increased (75 percent in 2010 and 86 percent in 2011).

The 2012 BDO Risk Factor Report for Technology Businesses, which analyzes the most recent SEC 10-K filings for the 100 largest publicly traded technology companies in the U.S., also found that natural disasters and other geopolitical issues pose a serious threat to supply chain management and operations. In fact, 88 percent of companies cited those risks in this year's study, up from 81 percent in 2011.

With business interruption top of mind, more tech companies (73 percent versus 68 percent in 2011) are worried about the maintenance of their infrastructure and information systems. Notably, 71 percent of tech companies cited breaches in security as a major risk, up 25 percent from 2011. The popularity of e-commerce and increased use of mobile devices are contributing to this concern.

"A rise in supply chain and business interruption risks was expected after the fallout from the 2011 Japan earthquake, floods in Southeast Asia and other natural disasters," said Aftab Jamil, partner and national leader of the Technology & Life Sciences practice at BDO USA, LLP. "The effects of these incidents extended so deeply into the technology industry and served as a reminder of the fragility of even the soundest supply chain. As tech companies continue to grow and extend their footprint globally, supporting and securing operations is paramount for success."

Source: BDO