Just two thirds of firms have supply chain visibility

posted by Andrew Allen

in Risk, Supply chain

 9 December 2016

Supply chain disruptions have cost one in three organisations more than €1m in the last year, according to a report.

The Supply Chain Resilience Report, published by the Business Continuity Institute and supported by Zurich Insurance Group, said the overall number of organisations experiencing supply chain disruptions fell from 74% to 70%.

However, organisations that did suffer disruptions suffered more of them, with the percentage of organisations experiencing at least eleven disruptions during the year increasing from 7% to 22%.

Increased costs were linked to significant increases in the amount of lost productivity, the increased cost of working, customer complaints, impaired service outcomes, damage to brand reputation and loss of revenue.

The survey found 43% of organisations do not insure these losses and so bear the full brunt of the cost themselves.

It also looked at the reason for the increase in the number of disruptions and found that fewer organisations are maintaining adequate visibility over their supply chain, with 72% doing so in 2015 compared to 66% this year.

“This could have major consequences when it comes to managing the supply chain and ensuring that disruptions are minimised,” said the report.

Some 41% of disruptions occurred with the immediate supplier, down from 50% last year. Two fifths of respondents did not analyse the source of disruption.

The single largest source of disruption was unplanned IT and telecommunications failures. The loss of talent/skills moved to second place, up from 6th in 2015. The other top causes of disruption were outsourcer failure, transport network disruption and cyber attack or data breach.

Only 27% reported top management commitment to supply chain resilience, down from 33% last year, and only 73% of businesses reported having business continuity arrangements in place to deal with supply chain disruptions.

Finding that supply chain visibility remains one of the biggest challenges to organisations, the report said there was a need for organisations to understand their supply chain in more depth, identify key suppliers and improve reporting of disruptions.

“The findings affirm how leadership input can significantly influence good practice and help build an appropriate organisational culture and structure,” said the report.