Survey: Supply Chain Disruptions Impact Clean Tech Profits

Nearly two-thirds (61%) of clean tech companies experienced a supply chain disruption in the past three years, and in the vast majority of cases (84%) the event had a material impact on the bottom line, according to the 2015 Global Cleantech Risk Survey.

Seventy-five percent of the firms that source products from China had a supply chain disruption.

Conducted by the Chubb Group of Insurance Companies and Cleantech Group, the online survey of 300 clean tech executives worldwide also found that supply chain disruptions resulted in delayed deliveries (69%), erosion of profit margins (28%), brand/reputation damage (27%) and reduced revenue (26%).

“As our survey confirmed, clean tech companies continue to innovate and expand their global footprint to grow sales, reduce expenses and achieve other benefits – but sometimes without fully appreciating the potential risks,” said Sheeraz Haji, chief executive officer, Cleantech Group.

Eighty percent of survey respondents either source or sell products in at least one country beyond their homeland; nearly one-half (40%) of them are doing so in China.

Government regulations, increased intellectual property risk and differing cultural practices were noted as the top three barriers to market entry in other countries.

“Operating beyond borders can be tricky,” noted Amy Ingram, vice president and worldwide clean tech manager for Chubb. “Clean tech companies should consider implementing greater measures to mitigate their vulnerability to supply chain disruptions.”

Though 46 percent of executives planned to pilot new projects in another location, the majority of respondent failed to consider the potential for devastating damages, the report stated.

Although clean tech companies employ a variety of supply chain risk mitigation practices, they put some of the best practices in place only infrequently. Only 23% track product shipments and even fewer purchase insurance (11%) and ensure that suppliers have business interruption plans (11%). In addition, 70% of clean tech companies do not have a written supply chain disruption plan.