North America saw the most supply chain disruptions in 2017, including two major hurricanes, Harvey and Irma ©Zuma Press/PA Images
North America saw the most supply chain disruptions in 2017, including two major hurricanes, Harvey and Irma ©Zuma Press/PA Images

Automotive supply chain disruptions up 30%

11 June 2018

The global automotive industry saw a “significant rise” in supply chain disruptions in 2017 compared to the previous year, a report has said.

The total number of disruptive events was up 30% to 1,699, compared to 1,306 in 2016, according to the Automotive Supply Chain Disruption report by insurance firm JLT Specialty and data firm Resilinc.

Fires and explosions were the largest cause of disruptions, with 318 incidents in 2017, up from 116 the previous year. This was followed by mergers and acquisitions (247), hurricanes and typhoons (116), business sales (111) and labour strikes (110).

The number of cyber attacks on suppliers doubled in 2017 to 12. The report said that while this is still a relatively low number, the “rapid pace of change” and the development of more connected vehicles mean the risks will increase. “Visibility over what security suppliers have in place is vital – but extremely hard to achieve, especially further down the chain,” it said.

In total, supply chain disruptions in the sector affected 5,585 suppliers across 10,809 sites in 2017.

The research also found there were nearly as many disruptions in tiers two and three of the supply chain as in tier one, but three quarters of companies had no visibility into tier two or beyond. It said firms were likely not doing deep-dives on their supply chain because of limited resources or skills, rather than a lack of will.

North America was the region that saw the most disruptions last year including two major hurricanes, Harvey and Irma. The region saw more disruptions (777) than the next two regions, Asia (402) and Europe (379), combined.

Hurricanes were also listed as the most disruptive. The report said it took supply sites an average of 33 weeks to recover from hurricane Irma.

Matthew Grimwade, head of automotive at JLT Specialty, said: “Our research shows that automotive manufacturers face some serious challenges – not just in terms of the growing number of disruptive incidents to the supply chain industry, but in the diversity of these events too.

“Being able to gain an insight into the key areas of exposure and supplier vulnerabilities is essential if auto manufacturers are to effectively prioritise risk, prepare a plan and protect their business.

“Manufacturers might also look to use this valuable insight to provide them with an opportunity to create a competitive edge – it’s a big challenge but certainly not an impossible one.”

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