Companies are underestimating the causes and extent of risk in their supply chain, according to a study by Zurich and the Business Continuity Institute, which found that almost one in 10 businesses could not identify their key suppliers, while 70% lacked visibility over their entire supply chain.
The study – The Supply Chain Resilience Report 2015 – highlighted the growing role played by technology in the management of complex, global supply networks, with the consequent rise in the risk of non-physical causes of disruption. These can include unplanned IT and telecommunications outages, cyber attacks and data breaches.
Furthermore, the study found that companies that engage in the concept of supply chain business continuity are more likely to have better visibility of their supply chain, will be better able to deal with the impact of losses. Moreover, leadership and commitment from senior management is essential to implementing good practice for supply chain 'resilience'.
The study also found that supply chain visibility remains one of the biggest challenges to resilience, underlining the complex nature of supply chains.
It encourages organisations to close gaps in supply chain resilience by engaging their suppliers.
Specific key findings from the survey include the following:
- 74% of the respondents experienced at least one instance of supply chain disruption;
- 72% do not have full visibility of their supply chains;
- 50% of disruptions originate from Tier 1;
- 31% do not analyse the cause of disruption;
- unplanned IT & telecommunications outage cause 64% of supply chain disruption;
- 54% of supply chain disruption is caused by cyber attacks and data breaches;
- adverse weather is the cause of half the supply chain disruption;
- the top five consequences of disruption are loss of productivity; customer complaints; increased cost of working; loss of revenue; and impaired service outcomes;
- 58% of organisations don't insure losses from supply chain disruption;
- 14% report cumulative losses of at least €1 million;
- 9% report losses of at least €1 million arising from a single incident;
- <1% claimed a single incident loss in the region of €500 million;
- new laws & regulations are viewed as the top risks in the next 12 months;
- 33% of respondents report high top management commitment to supply chain resilience; and
- 54% of SMEs have business continuity arrangements, compared to 74% of large businesses.
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