Report: 85% of Companies Report a Supply Chain Disruption

According to a newly published survey by Zurich Financial Services Group, 85% of companies reported at least one supply chain disruption over the last 12 months.

Respondents to the survey, sponsored by Zurich and conducted by the Business Continuity Institute (BCI), were from across 62 countries.

Further findings include:

• The earthquakes and tsunami experienced in Japan and New Zealand this year, affected 20% of responding organizations, headquartered in 18 different countries.

• Adverse weather was the main cause of disruption with 51% of respondents citing it – maintaining its prominence from the 2010 report. Unplanned IT and telecommunication outages were the second most likely disruption affecting 41% of respondents.

• Cyber attack rises to become a top three source of disruption in the financial services sector.

• Supply chain incidents led to a loss of productivity for almost half of businesses along with increased cost of working (38%) and loss of revenue (32%).

• Longer term consequences of disruption in the supply chain included shareholder concern (19%), damage to reputation (17%), and expected increases in regulatory scrutiny (11%).

• For 17% of respondents the financial costs of the largest single incident totaled a million or more Euros. This figure almost doubles to 32% where less resilient supply chains are evident in the research.

• The survey result that 40% of disruptions are below tier one also reinforces the importance of driving supply chain understanding to below the supplier tiers with whom the customer interacts directly.

• Among the threats rising in prominence is an HR one, with loss of talent or skills, rising from 14th place in 2010 to 6th place in 2011. This represents a warning that lay-offs among supply chain partners is leading to increased disruption.

• 74% of respondents either strongly agreed or somewhat agreed with the proposition that outsourcing and just-in-time/lean strategies were making their organizations more vulnerable to supply chain disruption.

The survey report, supported also by the Chartered Institute of Purchasing & Supply and DHL Supply Chain, concludes that effectively managing supply chain continuity is critical not just because of the immediate costs of disruption, but also the longer term consequences to stakeholder confidence and reputation that may arise following a supply chain failure.

Source: Zurich Financial Services Group