Almost three-quarters of organisations have reported having business continuity arrangements related to supply chain management. That’s according to a new report published by the Business Continuity Institute (BCI) and supported by Zurich Insurance Group. The report shows that organisations with business continuity arrangements are eight times more likely to report greater supply chain visibility, twice more likely to insure themselves for supply chain losses and three times more likely to display top management commitment.
No less than 74% of organisations now ask key suppliers about their business continuity arrangements, which represents a considerable increase from last year’s 63%. This behaviour coincides with other areas of good practice, notably organisation-wide reporting of disruption. The latter increases supply chain visibility.
Another important result outlined by the report is the use of technology and Big Data to overcome skills and resources gaps in supply chain management. The report shows that 63% of organisations don’t use any technology to analyse, track and monitor the performance of their supply chains.
Technology isn’t the only low uptake by organisations. The report highlights an increase in availability of insurance products against supply chain losses in the market. However, it shows that 51% of organisations still don’t insure against supply chain disruption at all.
The report concludes by underlining two other important aspects in supply chain resilience. The first is how reputation is still an important aspect in supply chain disruption, which requires organisations to become more aware of the issues around their supply chain and communicate effectively in times of crisis.
The second is the element of collaboration, which still faces challenges in being implemented, but represents a great resource for effective supply chain management.
Supply chain disruption: the main causes
The top causes of supply chain disruption are unplanned ICT and telecommunications outages, cyber attacks and data breaches, as well as loss of talent and/or skills. Fire is the biggest increase this year in terms of threats to the supply chain, jumping from fourteenth place last year to become the seventh biggest cause of disruption in 2017. On the other hand, terrorist acts and currency volatility have dropped out of the Top Ten.
The most significant impacts and/or consequences of disruption are loss of productivity (55%), increased cost of working (46%) and customer complaints. These remain as the Top Three impacts of supply chain disruptions.
As for the foremost economic impacts of disruption, more respondents (53%) reported losses for less than 50,000 Euros compared to last year (33%). However, losses of more than one million Euros have actually decreased from 34% to 22%.
Gianluca Riglietti CBCI, research manager at the BCI and author of the report, told Risk UK: “Supply chain disruptions have become increasingly tough for organisations to deal with. The current threat landscape requires very high levels of preparedness, as it includes a wide range of threats such as cyber attacks, terrorism and natural disasters. Professionals understand this, which is reflected in the higher number of respondents (74%) adopting business continuity arrangements in order to deal with supply chain disruptions. However, there’s still room for improvement, as more than one-in-five (22%) don’t have full visibility of their supply chains. On a different note, it’s also interesting to observe that the majority of respondents don’t use technology to analyse the performance of their supply chain, which might raise the question of how a higher uptake of modern solutions could affect performance.”
Nick Wildgoose, global supply chain product leader at Zurich Insurance Group, commented: “It’s encouraging to see some progress in terms of the reduction in the level of significant supply chain disruptions, but at 65% this figure is still very high. It’s important to understand your level of resilience. At the very minimum, you should be able to react quickest to a disruption event. Sometimes, being second simply isn’t good enough.”
Reinforcing good practice
For the last nine years, the BCI Supply Chain Resilience Report – published in partnership with the Zurich Insurance Group – has provided valuable insight into supply chain disruption and benchmarked the business continuity arrangements of organisations in this area.
Importantly, the document has also demonstrated how specific key behaviours reinforce good practice and help build an organisational culture that contributes to supply chain resilience and performance.