Three quarters of businesses suffer supply chain disruption

Gurjit Degun
7 November 2013

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Some 75 per cent of organisations experienced supply chain disruption in the past year, according to a study. 

The research, conducted by the Business Continuity Institute (BCI) and supported by CIPS and Zurich, revealed service failure by outsourcers are one of the top causes of supply chain disruption. 

The Supply Chain Resilience 2013 survey of over 500 business continuity professionals from 71 countries found three quarters of businesses experienced at least one supply chain disruption during 2012. It said 42 per cent of the failures originated below the immediate supplier.

An annual loss in excess of €1 million (£839,633) was reported by 15 per cent of respondents, and 9 per cent experienced a single event that resulted in a loss of more than €1 million.

The report highlighted 62 per cent felt “top management commitment to managing the supply chain is inconsistent or totally lacking”. Three quarters also admitted they did not have full visibility of their supply chain, and 30 per cent did not know where they fitted into any of their suppliers’ priorities.

The biggest risk to the supply chain over the next 12 months is believed to be technology (23 per cent), followed by regulation (17 per cent).

CIPS group CEO David Noble said: “This report highlights that supply chain risk and mitigating against disaster should be high on the business agenda. 

“The loss of talented individuals to manage supply chains remains a significant issue and demonstrates that trained and highly skilled people will continue to be in demand. Following this research it appears that until CEOs give it the recognition it deserves, disasters caused by supply chain disruptions will continue to affect organisations.”

Nick Wildgoose, global supply chain product manager at Zurich, said: “As a starting point it can be useful to look at your most profitable product or service and look at the profit impact of related supplier failure on your organisation. This should get you some attention." 

BCI technical director Lyndon Bird added: “This lack of visibility demonstrates just why it is important for businesses to start managing their supply chain more effectively.

“The supply chain can be complex and is only as strong as its weakest link so with more than four-tenths of disruptions occurring below the tier one supplier, businesses must ensure that all those down the chain have systems in place to deal with disruptions.”

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