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For most companies, dealing with suppliers is risky business

Lack of supplier management strategy threatens to disrupt manufacturing at major American corporations, reports Aberdeen Group study sponsored by Austin-Tetra 

Irving, Texas - October 17, 2005- Most companies lack a strategic approach to managing their suppliers, even though supply risks are on the rise, according to a study released today. This dangerous trend could lead to disruption of critical supplies, leaving companies unable to manufacture products on time and perform other revenue-producing activities.

More than 80 percent of supply management executives at 180 global enterprises reported that their companies experienced supply disruptions within the past 24 months, according to the study. The study, "Supply Risk Management Benchmark: Maintaining Continuity and Mitigating Risks in an Uncertain Global Economy," was conducted by Aberdeen Group and sponsored by Austin-Tetra, a leading provider of outsourced supplier and customer data management services.

Study participants said supply glitches negatively impacted their companies' customer relations, earnings, time-to-market cycles, sales and overall brand perception.

Worse yet, more than three-quarters of companies expect supply risks to increase over the next three years, thanks to supply market instability, new regulatory requirements, natural disasters and terrorist attacks. In addition to these market challenges, enterprises have become more vulnerable to supply disruptions because of the adoption of "best practices," such as low-cost country sourcing, outsourcing, supply base rationalization, and lean and just-in-time initiatives.

"Years of cost-cutting and lean operating practices have made businesses more vulnerable to supply disruptions than ever before," said Tim Minahan, author of the study and senior vice president of supply research and strategy at Aberdeen. "Pressures for business continuity and regulatory compliance will force companies to make supply risk management a core business discipline within the next five years by adopting procedures, metrics and systems."

Less than half of enterprises follow established procedures for assessing and managing supply risks, according to the study. In addition, many procurement organizations lack sufficient market intelligence, skills, and information systems to effectively predict and mitigate supply risks.

"Enterprises leveraging supplier information services and solutions, such as those from Austin-Tetra, as part of a comprehensive supply risk assessment and management program have not only reduced the frequency and impact of supply risks, but also have outperformed their peers in supply performance and costs," Minahan added.

Aberdeen predicts that supply risk management will emerge as a major business discipline and measure of competitiveness within the next five years. In fact, 60 percent of companies lacking a formal supply risk management program plan to initiate one within the next year.

"The study allows procurement professionals to examine the management, strategies, intelligence and systems that leading enterprises are employing to assess, track and mitigate supply risk," said Phil Berkebile, Jr., president and chief executive officer of Austin-Tetra. "Austin-Tetra can be a significant partner in reducing risk in the supply chain through our supplier data management solutions."

Aberdeen's benchmarking study uncovered five approaches that companies used to achieve the best performance from their supply risk management programs. Enterprises employing these methods outperformed their peers not only in overall reduction of supply chain disruptions, but also in overall delivery, cycle time and quality performance:

      1.  Define and enforce standard performance and risk measures and assessments.
      2.  Make risk management a core and repeatable business discipline.
      3.  Adopt sourcing methods to balance cost, performance and risks.
      4.  Leverage technologies and information services to improve risk planning,
           monitoring and response.
      5.  Develop and collaborate with suppliers to detect and mitigate risks.

      In addition, the report:

      -  identifies the leading areas of supply risk facing enterprises today
      -  quantifies the costs of supply risks and disruptions
      -  examines the management, strategies, intelligence and systems that leading
         enterprises are employing to assess, track and mitigate supply risk
      -  includes case studies of enterprises applying these techniques to better
         assess, predict and manage supply risks

To obtain a copy of the report, please click here to download.

About Austin-Tetra

With headquarters in Irving, Texas, Austin-Tetra has been a leader in global data management since 1993. The company offers some of the most comprehensive content-based management solutions in the market. Austin-Tetra sells its services to the largest companies in the world addressing the data requirements of global supplier management, strategic sourcing and customer relationship management. Austin-Tetra's coverage includes more than 50 million global businesses. Its solutions validate, enhance and enrich information on existing suppliers and customers and enable the identification of new ones. The company's services provide customers with enterprise-wide visibility into their trading partner base, enabling thorough analysis to help mititgate business risk, leverage buying power to reduce supply costs and maximize revenue generating opportunities. For more information, visit the company's web site at www.austintetra.com

About Aberdeen Group

Founded in 1988, Aberdeen Group, Inc., is the leading provider of fact-based research and advice for the global technology-driven value chain, delivering solutions for business and technology executives. Their portfolio of research-based solutions comprises benchmarking, market and solution assessments, solution selection and sales acceleration programs, and networking conferences. For more information, visit the company's web site at www.aberdeengroup.com.

For media information, please contact:

Sandy Garcia
972.756.8100 (office)
972.756.8111 (fax)
sandy.garcia@austintetra.com