BT 2012 Annual Report Download - page 40

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Strategy
Supply chain
We are dependent on our supply chain for the delivery of goods
and services on time, to cost and to specification. Failure of any of
our critical suppliers to meet agreed requirements could adversely
impact our customer service, product launches, updates to
business critical systems, revenue or cost reduction plans.
We are committed to ensuring that all dealings with suppliers,
from selection and consultation to contracting and payment are
conducted in accordance with our trading and ethical policies.
See Suppliers in Our resources section on page 31.
Our supply chain is global and we aim to harness the capability,
diversity and innovation of our supply market to add value to our
business and customers. Many suppliers are being impacted by
the economic downturn and the challenges of globalisation. This
is introducing further risk in our supply chain which includes, but
is not limited to: increase in supplier insolvency; lack of supplier
resilience following a natural disaster; lack of compliance with anti
corruption and bribery legislation; corporate social responsibility
risks in our extended supply chain, and security risks relating to
data protection.
Changes over the last year
Over the last year we have seen the impact of a number of
natural disasters including the Japanese earthquake and floods
in Thailand. Both, to some extent, have had an impact on the
supply of components used in the manufacture of our products
although the impact on us was minimised through robust supplier
business continuity plans. The current global economic and credit
market conditions, particularly in Europe, mean an increased risk
of suppliers failing.
Impact
Our suppliers could be adversely affected by continuing uncertain
economic conditions which in turn could impact their ability to
meet their obligations to us or, in the extreme, cause them to
fail. If we are unable to contract with an alternative supplier our
customer commitments could also be compromised leading to
contractual breach, loss of revenue, penalties or increased costs.
A failure in our supply chain to meet legal obligations or ethical
expectations could adversely impact our reputation or possibly
lead to censure, legal action and financial loss.
Risk mitigation
We continue to mitigate risks in this area through a number of
measures including: globally coordinated vendor management
programmes; rigorous bid controls; supplier risk assessments
including focus on our most critical suppliers; our Procurement
Academy Programme; anti-corruption and bribery awareness
training, and corporate responsibility and compliance health
checks. We work with our suppliers to ensure that the goods and
services that we buy are made, delivered and disposed of in a
socially and environmentally responsible manner.
Our sourcing strategies consider a wide range of potential
risks. Our plans are aimed at mitigating against, for example,
the impact of potential natural disasters or the current global
economic conditions on our suppliers. We thereby seek to
minimise the risk of not being able to meet our customer and
legal commitments or comply with our ethical policies. This helps
to minimise our exposure to loss of revenue, financial penalty and
any adverse impact on our brand and reputation.
Our risks
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information