The Business Continuity Institute’s latest Supply Chain Resilience Report shows that there was a decrease in the percentage of organizations that experienced at least one disruption (70 percent in 2016 from 74 percent in 2015); however, the number of organizations experiencing more than ten disruptions during the year increased from 7 percent to 22 percent.
Supply chain disruption impacts included:
- Loss of productivity: 68 percent in 2016, up from 58 percent in 2015,
- Increased cost of working: 53 percent up from 39 percent; and
- Damage to brand or reputation: 38 percent up from 27 percent.
43 percent of organizations do not insure these losses meaning that they are bearing the full brunt of the cost themselves.
Arguably one of the reasons for the increase in the number of disruptions for many organizations is that fewer of them are maintaining adequate visibility over their supply chain, with the percentage of organizations that do so decreasing from 72 percent in 2015 to 66 percent this year. This could have major consequences when it comes to managing the supply chain and ensuring that disruptions are minimised. The report concludes that ensuring supply chain visibility remains one of the biggest challenges to organizations with the data showing increased dependencies between suppliers and downstream organizations, reinforcing the need for organizations to understand their supply chain in more depth, identify key suppliers and improve reporting of disruptions.
The report also highlights that top management commitment is required in driving supply chain resilience and performance. The findings affirm how leadership input can significantly influence good practice and help build an appropriate organizational culture and structure.
Other findings of the report include:
- 41 percent of disruptions occur with the immediate supplier, compared to 50 percent last year, however 40 percent of respondents report that they do not analyse the source of disruption;
- The percentage of organizations reporting losses in excess of €1 million from a single incident remains static at 9 percent.
- Unplanned IT and telecommunications outage remains the top cause of disruption with loss of talent/skills moving up to 2nd place from 6th in 2015. The remaining members of the top five causes of disruption were outsourcer failure, transport network disruption and cyber-attack/data breach.
- Only a little over a quarter of respondents (27 percent) report high top management commitment to supply chain resilience, a worrying decrease from 33 percent last year.
- Just under three quarters of respondents (73 percent) report having business continuity arrangements in place to deal with supply chain disruptions.
The BCI Supply Chain Resilience Report was supported by Zurich Insurance Group.
Download a copy of the Supply Chain Resilience Report here (registration required).