Global Supply Chain disruptions on the rise

A new survey from the Business Continuity Institute (BCI) has revealed serious levels of supply chain failure. The research from 35 countries shows that over 70 percent of organizations recorded at least one supply chain disruption in 2010.

The survey shows that while awareness of supply chain risks is increasing, many businesses remain exposed to high levels of risk. Sponsored by Zurich Insurance Company, the survey report concludes that outsourcing, in particular in IT and manufacturing, often ultimately reduces cost-benefits through greater exposure to supply chain disruption.

Further findings include:

• Adverse weather was the main cause of disruption around the world, with 53 percent citing it - up from 29 percent last year.
• Unplanned IT and telecommunication outages was the second most likely disruption and the failure of service provision by outsourcers was third, up to 35 percent from 20 percent in 2009. These incidents led to a loss of productivity for over half of businesses.
• The average number of identified supply chain risks in the past 12 months was 5, with some organizations reporting over 52.
• 20 percent admitted they had suffered damage to their brand or reputation as a result of these disruptions.

Lyndon Bird FBCI, Technical Director at the BCI, commented:

“The serious levels of supply chain disruption experienced by organizations around the world, coupled with the wide range of threats, underscores the business case for investment in business continuity management (BCM),” said Lyndon Bird FBCI, Technical Director at the BCI.

“Intelligently applying BCM to time sensitive supply chains is a vital risk mitigation technique and should especially underpin business decisions to extend or optimise supply chains.”

Furthermore, he said, BCM provides “peace of mind” that suppliers will be able to support you when they are faced with a disruption, and that your organization has workable plans in place to deal with and recover faster from supply chain disruption.”

The observations echo those made by analysts interviewed by SCMR.

“There likely won’t be a universal signal indicating that the economy is recovering, so businesses may not know when to adjust their models back to pre-recession levels,” said Dr. Robert P. Hartwig, economist and president of the Insurance Information Institute (III).

Speaking at the Council of Supply Chain Management Professional’s (CSCMP) annual meeting in San Diego earlier this year he noted that businesses often consider the costly consequences of facing a supply chain interruption, without considering the implications regarding risk.

“Having a supply chain that is not sufficiently prepared for increased demand can also present financial and reputational costs,” he said.

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