Supply chain disruptions continue to be a significant problem industry wide because they are not being effectively managed, a recent report suggests.
MHI, citing a recent annual analysis named Supply Chain Resilience 2013, by Zurich Insurance Group, reported that 75 percent of respondents do not have full visibility of their supply chain.
Perhaps more troubling is that 30 percent did not know where they fit into any of their suppliers’ priorities, MHI reported.
“Supply chain failure is still a key performance issue for business,” the survey concluded. “Consistently high levels of supply chain disruption are being reported with a number of threats being re-considered as new evidence and concerns emerge.”
According to the study’s executive summary synopsis:
- 25 percent of respondents coordinate and report to gain an enterprise-wide view of disruption, unchanged from 2012;
- 75 percent of respondents experienced at least one incident that caused disruption, consistent with the report’s findings from the previous four years;
- 42 percent of disruptions originated below the tier one supplier, an increase from 2012;
The most common sources of disruptions, according to the report, were unplanned IT or telecom outages, “with 55 percent stating they experienced high or some impact from this type of disruption.” Adverse weather, at 40 percent, and outsourcer service provision failure, at 37 percent, were the second- and third-most cited sources.
“Below the top three, there have been some significant changes from 2012 to the main causes of disruption,” the report added. “Transport network disruption climbed from 14th place to fourth with 30 percent experiencing high or some impact. The high profile media reporting of the danger of cyber-attacks has resulted in the type of disruption rising from 18th place to fifth.”
Even the skills gap made a noticeable impact, the report claims, saying, “The non-availability or loss of talent/skills increase from 10th place to sixth”
The causes of disruptions differ depending on the country or industry, the report adds. For instance, product quality incidents are prominent in manufacturing, engineering, and construction, while adverse weather “takes the top spot for 2013 as a source of supply chain disruption” in the U.S.
“While insolvency in the supply chain maintained its ninth place in 2013, other financial risk related sources of disruption did recede,” the report states in its aforementioned executive summer index. “Lack of credit fell to 21st place from 12th and currency exchange rates volatility dropped from fifth place to 17th.”
The survey ranked the loss of productivity, at 55 percent of respondents’ replies, as the top consequence of a supply chain disruption. Runner-up was customer complaints. An increased cost of working, service outcome impaired, and a loss of revenue rounded out the top five.
The report cited technology, at 23 percent, and regulations, at 17 percent, as the biggest risk to the supply chain in the coming year, MHI reported.
“One of the key challenges is to get consistent top management support for investing in improved supply chain resilience,” the survey said under its list of significant conclusions. “Consistent top management support is required to make a change. … Proactive leadership, not crisis management, is required.”