Many have claimed in recent months that the global supply chain is faulty, but now experts are backing up that assertion with research figures.
The latest study by the Business Continuity Institute cites adverse weather conditions as the biggest culprit, although researchers say a variety of factors will require companies to rethink the way they manufacture and move goods. The research found 72 percent of respondents experienced at least one disruption in their supply chain in 2010, with 53 percent citing adverse weather as the main cause of disruption worldwide, up from 29 percent in 2009. Unplanned IT and telecommunication outages and the failure of service provision by outsourcers were cited by 35 percent of supply chain professionals who participated in the survey, up from 20 percent in 2009.
The “Supply Chain Resilience Report 2010” concludes that companies on average reported five supply chain delays in the past 12 months, but some organizations experienced more than 50 incidents. Survey respondents came from 35 countries across 15 industry sectors, with the majority outside the UK, so the findings are not limited to one region in the world.
Half of companies surveyed have tried to optimize businesses through outsourcing, consolidating suppliers, or adopting lean manufacturing techniques. And note that businesses that shift production to low-cost regions significantly increase their risks of supply chain disruptions, with 83 percent experiencing problems. I reported on this earlier this decade.
We only had to wait about 10 years for an organization to confirm what we already knew. Executives at third-party logistics companies have been telling supply chain professionals for years that outsourcing will cost more in the long term. Actually, the findings are quite shocking. Fifteen percent of respondents do not review their business continuity plans with key suppliers; 18 percent do not seek evidence of business continuity; and 50 percent do not validate that key supplier business continuity plans actually work in practice.
The study looks at financial services, manufacturing, government, education, retail, and more. What have you done in the past 10 years to lower supply chain costs? And how long did it take for your company to reap the return on investment?