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US Tops the List for Disruptive Events to Supply Chain This Year

Supply chain professionals can count on regular weather-related disruptions to the supply chain and this year has been no different.   2017, though, was different in that the United States, for the first time, was the most impacted region in the world in terms of natural disasters. This was one of the key findings of 2017 EventWatch Supply Chain Disruption Annual Report released today by Resilinc, a provider of supply chain resiliency solutions.

Hurricane Harvey. Photo courtesy: Wikamedia.

Hurricane Harvey. Photo courtesy: Wikamedia.

 

Nearly one third of S&P 500 companies were impacted by these disruptions. “This should be a wake-up call for business leaders around the globe,” said Bindiya Vakil, CEO of Resilinc. “2017 was a turbulent year for US companies and their supply chains, causing a hidden drag that must be addressed.  With 32% of S&P 500 companies potentially impacted, that is a staggering figure.” 

The top 5 events of 2017 in terms of impact to businesses were:

  1. Late winter storm in northeast USA, March
  2. Weather related damage closes US/Mexico Laredo border, May
  3. Hurricane Harvey in USA, August 
  4. Hurricane Irma in USA, September
  5. Hurricane Maria in Puerto Rico, September  

The plethora of impactful events in the United States proved an interesting counterpoint to the push for a “Made in America” manufacturing strategy that has be highlighted by the recent Presidential administration. “The thing that makes the U.S. a safe location relatively speaking is that macro economically we have an ability to come back from events,” Vakil said. “It has been an interesting year for nearshoring proponents. It was a reminder that there’s risk everywhere.” 

The annual report analyzes incidents by risk type, industry, geography, and disruption potential. Factory fires/explosions were the most common disruption, representing 18% of the bulletins last year. In the high-tech industry, mergers and acquisitions were also a notable source of disruption.

 

Cyber-attacks, such as ransomware, also increased substantially compared to last year. “That’s the reality of where the world is headed as we become more interconnected,” said Vakil.  “People looking to use information and network and electronic dependence to their benefit.” In this new world, OEMs should do regular security assessments at the supplier level to ensure data and access to systems does not get compromised, she added.

The automotive industry was the most disrupted industry with an increase of 30% in bulletins published.  Fires were the main culprit for automotive makers, Shahzaib Khan, director of EventWatch told EBN.  At the same time, every industry surveyed experienced an increase of nearly 300 or more in bulletins this year compared to last year.

The company gathered information from EventWatch, its 24×7 global event monitoring service. The service provides monitoring, alert, and analysis on natural disasters, extreme weather, fires, environmental hazards, geopolitical occurrences, and other business developments. As part of the service, the company sends bulletins to all of the suppliers of subscribed manufacturers and asks for the supplier to confirm whether or not the event has impacted them.   Resilinc analyzed hundreds of millions of alerts from over 100,000 sources in 44 languages last year.

In the coming year, environmental events may warrant close monitoring, Khan said. “It’s interesting to see how China is responding to pollution,” he added. “The government reaction to pollution reports are sometimes hyper. They send out notices to hundreds of companies giving them a week or two reduce or shut down production. Almost every supply chain touches China at some point, and these movements will definitely affect a lot of companies.”  

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

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