Factory fires and changes in ownership of supplier firms were the two most common disruptions faced by supply chains in 2020, despite the ongoing Covid pandemic, a report found.
The report from supply chain monitoring platform Resilinc found supply chain disruptions were up 67% in 2020 compared to the previous year.
Factory fires, mergers and acquisitions, business sales, factory disruptions, and human health were ranked as the top five supply chain disruptions in 2020.
Eight in 10 (83%) disruptive events in 2020 were human caused, ranging from factory fires to legal and regulatory action, labour disruptions and profit warnings on supplier firms.
The report warned while human caused disruptions don’t receive the same media attention as storms, floods or earthquakes, they can “delay or disrupt production and sap revenues even worse than a category four hurricane”.
“While human health disruptions – which include Covid-19-related events – ranked fifth in terms of the number of event alerts, the disruption caused by pandemic was more damaging than any other event type,” the report said.
“Covid-19, and the government policies enacted in response to it, created deeper global impacts, leading Resilinc to designate the event as 'severe' – the first time in the company’s history ranking an event at that level of impact.”
Resilinc said it had sent out 6,192 alerts about potential supply chain disruptions to its customers during 2020.
Data revealed North America experienced the most disruption alerts with 2,935, followed by Asia (1,323), and Europe (1,210).
Bindiya Vakil, CEO of Resilinc, said: “Many of us in supply chain risk management have been talking for years about the need for greater visibility in supply chains. We’ve been pointing out that supply chains have been designed to take costs out through globalisation, but in the process, they’ve become exposed to greater and greater risks.
“The pandemic of 2020 really exposed that reality and woke people up to the fact that these risks have real consequences and in the future they need to balance cost-savings and inventory reduction with risk and resilience.
“I like the old saying. ‘Whatever doesn’t kill you makes you stronger’. For supply chain professionals, if your business survived Covid-19 and you took the time to learn from it – what worked, what didn’t, and how you can make your supply networks more resilient – then you’re going to be a stronger, more resilient company going into the future.”
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