The good news is that almost three-quarters of organizations have business continuity arrangements related to supply chain management, according to a new report. What’s more, it notes that organizations with business continuity arrangements are eight times more likely to report greater supply chain visibility, twice more likely to insure for supply chain losses and three times more likely to display top management commitment than their counterparts.
The report, “Supply Chain Resilience Report 2017,” published by the Business Continuity Institute and supported by Zurich Insurance Group, explains that, when surveyed, 74 percent of the respondents said their organization asks key suppliers about their business continuity arrangements—up from 63 percent last year. This behavior coincides with other areas of good practice, especially organization-wide reporting of disruption, which increases supply chain visibility, the report continues.
The leading causes of supply chain disruption—as reported by respondents—were unplanned ICT and telecommunication outage, cyber-attack and data breach, and loss of talent and/or skills. Fire as a cause of supply chain disruption increased the most this year—jumping from the 14th cause of disruption last year to the seventh cause this year. On the other hand, terrorist acts and currency volatility have dropped out of the top 10 causes of supply chain disruption. Chief among the impact and/or consequences of disruption were loss of productivity (cited by 55 percent of the respondents), followed by increased cost of working, then customer complaints.
There is, of course, considerable opportunity for improvement, particularly when it comes to the use of technology and big data to overcome skills and resource gaps in supply chain management. For example, the report shows that 63 percent of organizations don’t use any technology to analyze, track and monitor the performance of their supply chains.
Interestingly, the report notes that there is an increase in availability of insurance products against supply chain losses. However, it also notes that 51 percent of the respondents said their organization still doesn’t insure against supply chain disruption.
“Supply chain disruptions have become increasingly tough for organizations to deal with,” says Gianluca Riglietti CBCI, Research Manager at the BCI and author of the report. “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 percent) adopting business continuity arrangements to deal with supply chain disruptions. However, there is still room for improvement, as more than one in five (22 percent) companies don’t have full visibility of their supply chains.
The report concludes by emphasizing two other important aspects in supply chain resilience. The first is that reputation is still an important aspect in supply chain disruption, and its management and protection requires organizations 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 significant resource for effective supply chain management, the report explains.
What are your thoughts on business continuity and supply chain resiliency? Is your company’s supply chain adequately prepared for disruption?