These are historically turbulent times for the industrial manufacturing industry. And the profound impact of COVID-19 continues to heighten industry challenges as organizations endure supply chain disruption, inventory volatility, cost cutting, and potential fraud and corrupt practices among suppliers.
Third-party relationships are increasingly embraced as a critical source of competitiveness and growth in today's remarkably challenging global environment. Yet, as our global survey of third-party risk management (TPRM) executives illustrates, manufacturers are struggling to implement robust, sustainable TPRM programs amid the lack of strategies, investments, skills and technologies considered critical for the consistent selection, assessment and monitoring of third parties.
- Manufacturing businesses surveyed cite cyber risk management, data governance/privacy, cost efficiency, business growth and brand reputation as 'business critical' initiatives. Yet 45 percent still lack the in-house capabilities needed to manage all third-party risks, with TPRM funding described as limited (51 percent) or scarce (21 percent), while 58 percent also believe their TPRM teams are 'undervalued.'
- Manufacturing businesses have the following TPRM processes in place today: assessment of third parties before contract (44 percent); third-party monitoring (40 percent) or on-site assessment (35 percent); a risk-based monitoring approach (41 percent); second-line (36 percent) or third-line (37 percent) oversight of TPRM and third parties; regular reporting of TPRM to senior management (42 percent).
- Three-quarters (74 percent) of overall respondents admit that their organizations 'urgently need to make TPRM more consistent across the enterprise.'
The KPMG 2020 global online survey of 1,100 senior TPRM executives, including Industrial Manufacturing companies, reveals that the journey to effective TPRM has, for many businesses, barely begun despite today’s extreme challenges.