US technology companies are growing increasingly concerned about supply chain issues.
New research by BDO USA, LLP found that US and foreign supplier concerns/supply chain issues are now considered a top risk factor by 86 percent of the 100 largest publicly traded technology companies analyzed that's up 15 percent from last year's survey results.
Even so, supply chain issues came in tied for sixth place on the list of top 10 risk factors. Here's the complete list:
Competition, consolidation and pricing pressures (97 percent)
US general economic concerns (96 percent)
Federal, state or local regulations (96 percent)
Failure to properly execute corporate strategy (93 percent)
Failure to develop or market new products or services (88 percent)
Legal proceedings (86 percent)
US and foreign supplier/vendor concerns, supply chain issues (86 percent)
Management of current and future M&A or divestitures (85 percent)
Threats to international operations (85 percent)
Predicting customer demand and interest, innovation (85 percent)
The list of the top 20 risk factors cited by the 100 US tech companies in the survey is available here.
BDO USA also found that:
Supply chain concerns are multi-dimensional. Drilling down into supply chain issues, the survey revealed that logistical interruptions or delays are seen as a major threat. Seventy-five percent of companies cite equipment failure and delays as risks, up from 2010 (64 percent) and 2009 (58 percent). The potential disruption to factories and distribution channels as a result of natural disasters and geopolitical issues is also a heightened concern for 81 percent of companies, up 26 percent over 2010 (55 percent). According to BDO USA, this marks a particularly notable jump, since these disclosures were made before the Japan earthquake. Companies are also significantly more concerned with the price and availability of raw materials (34 percent, compared to 19 percent in 2010) and balanced inventory (57 percent, up from 30 percent in 2010).
Regulation risk concerns are increasing, too. Tech companies are increasingly concerned over government regulation (the second most commonly cited risk factor this year at 96 percent, vs. 88 percent in 2010 and 81 percent in 2009). At the same time, uncertainty over the convergence of accounting standards and the final rule on revenue recognition has many tech companies (58 percent) concerned about compliance issues.
Intellectual property protection worries are climbing. Concerns over IP protection (79 percent) are up, after falling from 86 percent in 2009 to 74 percent in 2010. IP risks also factor into escalating concerns over legal proceedings (86 percent, up from 80 percent in 2010), as well as rising concerns over innovation and new product development.
Security breaches are threat. Concerns over the ability to maintain operational infrastructure were cited by more than two-thirds (68 percent) of tech companies this year, representing 62 percent growth over 2010 (42 percent). As reports of recent data thefts at Amazon and Sony pepper news headlines, security breaches are a main cause for anxiety with 57 percent of companies citing it as a risk, up from 2010 (44 percent) and 2009 (30 percent).