Supply chain disruptions 'costing firms $184m'

Global supply chain disruptions are costing large companies an average $184m annually, a report has found.

The Annual Global Supply Chain report by software company Interos said the cost of disruptions varied across regions, with the average cost in the US being $228m compared to $145m in the DACH countries of Germany, Austria and Switzerland and £146m in the UK.

“Supply chain disruption is understandably a huge financial burden, with it costing an annual $184 million on average to each organisation’s revenue,” said the report. “It is clear therefore why supply chain risk management will become the top priority for many organisations within the next couple of years.”

IT and technology companies faced the biggest average costs ($194m), followed by aerospace and defence ($193m) and financial services ($164m).

The report said supply chain shocks included Covid-19, cyber attacks such as that on SolarWinds, the blockage of the Suez Canal, as well as ESG (environment, social and governance) transparency issues.

The survey polled 900 senior IT, IT security and procurement decision-makers from companies across the US and EU.

Almost all (94%) respondents reported some negative impact to revenue as a result of supply chain disruption. Eight in 10 (83%) believed their organisation had suffered reputational damage as a result.

Covid-19 had impacted 51% of organisations’ global supply chains over the last two years, and 89% of those affected had seen disruptions to product lines and locations.

Almost eight in 10 (77%) had seen at least one cyber attack on their supply chain over the last year.

Nine in 10 (88%) reported that international trade disputes would cause significant, notable, or moderate impacts to their organisation.

Overall the most common impacts were being forced to make changes to production locations, seeing payment infrastructure disrupted and increases in cyber espionage.

Half (50%) of respondents believed supply chain security would be their organisation’s top business priority in two years’ time, while currently 39% said that was the case.

Boards are meeting to discuss supply chain risk more frequently, with 78% saying their boards confer on this topic at least once every month.

Only 34% said they currently assess their global supply chain on a continuous basis using latest generation risk-mitigation technologies such as artificial intelligence and data and analytics.

Jennifer Bisceglie, CEO of Interos, said: “The recent White House Executive Orders on supply chain integrity and cyber security point to the fact that the fragile extended supply chain has become the soft underbelly of the global economy.

“We see the private sector both here in the States and in Europe starting to think more intensely about how best to respond to such growing challenges and vulnerabilities.”

She added: “We can no longer cleanly separate digital and physical supply chains, which is driving a need for greater transparency into hidden supply chain risks, relationships and reliances, which companies are recognizing as critically important to protecting both the bottom line and corporate reputation.”

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