Earthquake, flood… and other things

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Wars, earthquakes and floods can all cause major disruption to supply chains and it is all too easy to think of supply chain disruption in these terms.

But how about design changes to the product? Or finished goods manufacturing failures?

A new survey by the Centre for Transport & Logistics at the Massachusetts Institute of Technology, suggests that these are more common causes of problems than you might have thought.

Some 44 per cent of respondents indicated that they suffer inventory write-offs due to a new design change about yearly, and 16 per cent experienced such a disruption on a weekly or monthly basis.

Finished goods manufacturing failures were clearly a problem; 28 per cent and 24 per cent of respondents were hit by these breakdowns about yearly and monthly or weekly, respectively.
There were similar rankings for failures related to raw material supply, transport carriers, and product quality.

Spikes in raw materials costs also ranked high as an annual occurrence (43 per cent), with 17 per cent of respondents being hit by this type of disruption every month or week.

These results represent the initial responses to The Global Supply Chain Risk Management research project which was launched in late 2009 by the MIT Global SCALE (Supply Chain and Logistics Excellence) Network. Supply Chain Standard readers played a key role in the international survey.

And, if design changes are a big problem, external events such as earthquakes, floods, and loss of electricity for an extended period happen infrequently, according to the respondents.

Almost 50 per cent of respondents confirmed that they regard on-time delivery with the same sense of urgency as their customers. However, significantly fewer (21 per cent) see suppliers as sharing their sense of urgency.

Respondents were also asked to list the top three disruptions for which their company sites should prepare. A breakdown in the supply of quality materials was the first choice for one-third followed by interruptions to internal operations (30 per cent).

More revelations are likely to come out of this work, as the survey team carries out more detailed follow-up interviews.

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