Study shows 35 per cent rise in supply chain disruption

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Disruption to supply chains has risen by 35 per cent over the past year, according to new research by the Business Continuity Institute and supported by Zurich Insurance.

Manufacturers have been particularly hard hit, reporting a 58 per cent increase in disruption to their supply chains.

The report “Supply Chain Resilience” found that three quarters of respondents experienced disruption in their supply chain in the past 12 months. The chief causes of disruption were: the economic recession, swine flu, and IT and telecom disruption.

The impact of the disruption was primarily a loss of productivity, although loss of revenue, customer complaints and delayed product availability featured highly.

Some two thirds of organisations felt that they had been only partially successful in getting their business continuity needs adopted through their supply chain. One in nine felt their needs had been fully met, while almost a quarter had either not tried to do this or had not been successful at all.

The survey also found that Insurance products for financial protection registered a low response due to the immaturity of the market for such products. However, a number of insurers are starting to move into this area.

Lyndon Bird, international and technical director at the BCI, said: “We’re now seeing the downside of years of outsourcing, extended supply chains and focus on core competency; organisations are now much more vulnerable to supply chain disruption than in the past.

“While companies have banked the cost savings, this research indicates they have still to make the corresponding investment in resilience.

“The economic recession, in particular, is exposing vulnerabilities and dependencies through supplier insolvencies, reduced capacity and the tightness of credit markets. Business continuity management provides a robust and proven approach to prepare an organisation for and protect against disruption in its supply chain.”

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