Supply chain disruptions are not a matter of if but when, although their relative impact on the organization can vary widely

Thursday, November 7, 2013

The results of a recent report titled "Supply Chain Resilience 2013" by Zurich Insurance Group make it clear that supply chain disruptions continue to have a significant impact on business performance and the problem is not being effectively managed.

According to the report, 75% of respondents still do not have full visibility of their supply chain and that 30% did not know where they fit into any of their suppliers’ priorities. Only 25% coordinate and report to gain an enterprise-wide view of disruption. In addition, 75% of respondents experienced at least one incident that caused disruption over the last year and 42% of disruptions originated below the tier one supplier.

The primary sources of disruption were unplanned IT outages, with 55% stating they experienced high or some impact from this type of disruption. This was followed by adverse weather (40%) and outsourcer service provision failure (37%).

One of the key challenges is to get consistent top management support for investing in improved supply chain resilience. Effectively tracking the entire supply chain is essential for reducing the immediate costs of disruption and managing the long term reputation of the business.

Further findings from the report include:

  • The leading impact following a disruption is loss of productivity with 55% experiencing this in the last year. 41% reported customer complaints and 33% experienced an increased cost of work and service outcome impaired
  • The biggest risk to the supply chain over the next 12 months was reported to be technology (23%) followed by regulations (17%)
  • 49% of respondents state that half or less of their key suppliers have business continuity arrangements in place for their own needs

Now into its fifth year, the Annual Supply Chain Resilience Survey has established itself as an important vehicle to highlight and inform organizations of the importance of supply chain resilience and the key role it plays in achieving overall organizational resilience in today’s volatile global economic climate. The outcomes of previous surveys have provided organizations with critical insights and valuable information to support the development of appropriate strategic responses and approaches to mitigate the impact and consequences of disruptions within their supply chains.

Click here to view the complete report.