What are the weakest links in the global supply chain?

Since 2009, the Supply Chain Resilience Survey report is a respected industry resource that considers challenges in building resilient supply chains. This is the sixth annual report and the data comes from 525 respondents based in 71 countries. The report continuously tracks the origins, causes and consequences of supply chain disruption in different industry sectors as reported by professionals working on the ground. This also features business continuity arrangements in place to build more resilient supply chains.

Key Findings

• 73.5% of respondents do not have full visibility of their supply chains. Only 26.5% of organizations coordinate and report supply chain disruption enterprise-wide. This is a slight increase from 25% last year.
• 76% of respondents report at least one instance of supply chain disruption last year. This represents a slight decrease from the average of 78.6% since 2010.
• 44.4% of disruptions originate below the Tier 1 supplier and 13% of organizations do not analyze their supply chains to identify the source of the disruption.
• The primary sources of disruption to supply chains in the last 12 months were unplanned IT and telecommunications outage (52.9%), adverse weather (51.6%) and outsourcer service failure (35.8%). These comprise the top three sources of disruption since 2012 but more respondents report disruption caused by adverse weather compared to last year.
• Below the top three, the most significant changes were the emergence of data breach (up three places to 8th), industrial dispute (up eight places to 9th) and currency exchange rate volatility (up ten places to 10th) in the top ten.
• The loss of productivity (58.5%) remains as the top consequence of supply chain disruptions for the sixth year running. Increased cost of working (47.5%) and loss of revenue (44.7%) are also more commonly reported this year and round out the top three.
• Almost a quarter of respondents (23.6%) report annual cumulative losses of at least €1 million due to supply chain disruptions. When asked about the largest losses arising from a single incident, more respondents have recorded losses of at least €1 million (13.2% from last year’s 8.6%). The largest single loss was in the range of €51-100 million.
• While unplanned IT and telecommunications outages continue to be an immediate concern, cyber attacks emerge as their top concern for practitioners (53.9%) when asked to horizon scan for threats in the next five years.
• For the first time in the survey, we asked respondents if their losses arising from supply chain disruption were insured. 40% of respondents have not insured their losses at all and only less than 20% have insured at least half of their losses due to supply chain disruption.
• Respondents reporting low top management commitment to this issue have risen from 21.1% to 28.6%. This is a worrying finding as low commitment is likely to coincide with limited investment in this key performance area.
• From 2012, the percentage of firms having BC arrangements in place against supply chain disruption has risen from 57.7% to 72.0%. However, segmenting the data reveals that small and medium sized enterprises (SMEs) are less likely to have BC arrangements (63.9%) than large businesses (76.2%).

Published in collaboration with Zurich Knowledge Hub

Author: Nick Wildgoose is a Global Supply Chain Product Leader at Zurich.

Image: Crew members of a ship loaded with containers wait for its departure. REUTERS/Paulo Whitaker