The top five supply chain disruptions of 2014

Paul Snell is managing editor at Supply Management
12 March 2015

Typhoons accounted for two of the five worst disruptions to supply chains in 2014, according to research.

Analysis by supply chain risk technology provider Resilinc, which receives notifications of disruptions generated by its monitoring service and the data it holds on more than 40,000 suppliers, found that Typhoon Halong, which hit south east Asia in August last year, affected business revenues by more than $10 billion.

Another typhoon in the region - Rammasun, which occurred in July - cost $1.5 billion. A third typhoon - Fung-Wong in September, which hit eastern China - did not make the top five but earned ‘honourable mention’ status for affecting revenues by more than $500 million.

Severe flooding in Long Island, New York, gas explosions in Kaoshing, Taiwan and a hazardous chemical spill in Arizona, US made up the top five events.

While the Taiwan explosions made the top five, no other specific factory fires or explosions were mentioned although they again topped the list of most frequent interruptions to supply chains. But the number reported was significantly less than in 2013.

The automotive, high-technology and life sciences sectors were worst affected by disruptions in 2014.

“This was a good year for supply chain events as there were no severe disruptions on the scale of the 2011 Thailand floods, the 2011 Japan earthquake and tsunami or 2012’s hurricane Sandy,” said Shazaib Khan, Resilinc EventWatch program manager.

“It is important to keep in mind, however, a common misstep organisations make is placing too much emphasis on planning for the highest impact risks and disaster scenarios. Supply chain impact research indicates that smaller, more frequent disruptions are more costly in aggregate than those precipitated by high-impact, but infrequent events.”

The five worst disruptions of 2014 (estimated revenue impact, and time needed to recover)

1. Typhoon Halong, south east Asia ($10+ billion, 41 weeks)

2. Severe flooding, Long Island, New York, US ($4+ billion, 38 weeks)

3. Typhoon Rammasun, south east Asia ($1.5+ billion, 38 weeks)

4. Gas explosions, Kaoshing, Taiwan ($900+ million, 26 weeks)

5. Hazardous chemical spill, Arizona, US ($900+ million, 10 weeks)

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