Companies need to focus more on supply chain risks.
Today's supplier networks are global, complex and punctuated with significant threats. As a result, supply chain failure is now increasingly common. In fact, a fascinating new study by the Business Continuity Institute (BCI) revealed that, as remarkable as it sounds, more than 70 percent of organizations recorded at least one supply chain disruption in 2010.
The survey also found that:
The number one cause of disruption was adverse weather. More than half (53 percent) of survey respondents said that adverse weather caused a disruption that's up from 29 percent last year.
The second most likely cause of disruption was unplanned IT and telecommunication outages. The failure of service provision by outsourcers was third, up to 35 percent from 20 percent in 2009. These incidents led to a loss of productivity for over half of businesses.
The average number of identified supply chain risks in the past 12 months was five. But, a few organizations reported more than 52!
20 percent of those polled admitted they had suffered damage to their brand or reputation as a result of supply chain disruptions.
Half (50 percent) have tried to optimize their businesses through outsourcing, consolidating suppliers, adopting Just-In-Time (JIT), or lean manufacturing techniques.
Businesses that shifted production to low cost countries were significantly more likely to experience supply chain failures, with 83 percent experiencing disruption. The main causes were transport networks and supplier insolvency.
Only 7 percent had been fully successful in ensuring suppliers adopted business continuity management practices to meet their needs. Nearly a quarter of survey respondents said they did not take this step, at all. Even when suppliers were regarded as key to their business, nearly half of respondents had not checked or validated their supplier's business continuity plans.
Most businesses in the poll look to recover critical services within 24 hours, since sustained disruption beyond this period will cause significant economic and service delivery problems in many sectors. Very few organizations plan for disruption lasting longer than one week.
An executive summary of the BCI report is available here.