Supply chain could fail to beat the bug

Only one in four companies has prepared to switch to an alternative supplier in the event of disruption caused by the millennium bug, according to the latest Action 2000 report. The report, billed as the fourth in its ‘State of the Nation’ updates on readiness to deal with millennium bug problems at the end of […]

Only one in four companies has prepared to switch to an alternative supplier in the event of disruption caused by the millennium bug, according to the latest Action 2000 report.

The report, billed as the fourth in its ‘State of the Nation’ updates on readiness to deal with millennium bug problems at the end of this year, shows many firms are so far behind in their preparations that they risk running out of time.

‘At the current rate of progress, 40% of small to medium-sized businesses will not be in a position to beat the bug come the date change,’ warned Action 2000 managing director Gwynneth Flower.

Among businesses of this size, manufacturing companies, and those in finance and retail activities are furthest ahead, the report reveals. But many have been slow to look beyond their own activities and into those of suppliers or to potential suppliers who could step in if things go wrong.

‘It is worrying that only a quarter of those companies interviewed have formal plans in place for switching to an alternative supplier in the event of disruption,’ Flower said.

The report found companies split into two camps. One half are discussing millennium bug compliance with suppliers on an informal basis, while the other is seeking a written statement.

About 11% of companies are threatening to change suppliers if action is not taken, while 9% are offering preferred supplier status for companies that are getting on with the compliance tasks. ‘Preferred supplier status is the most effective method of encouraging suppliers to take action,’ Flower said.

The number of firms taking this route remain a minority, though this figure could increase. Only about half the companies trying to get compliance among suppliers believe their actions have been effective so far.

Companies get on average seven requests from customers each month seeking information about their own millennium bug standards. About 60% will respond individually. Worryingly, 2% of companies simply ignore such requests.