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  November 10th, 2017 | Written by

Business Continuity Remains Essential In Building Supply Chain Resilience

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  • Seventy-four percent of organizations ask key suppliers about business continuity arrangements.
  • Report: 63 percent of organizations do not use technology to analyze, track, and monitor the supply chain performance.
  • Reputation is still an important aspect in supply chain disruption.

Almost three-quarters of organizations have reported having business continuity arrangements related to supply chain management. That is according to a report published by the Business Continuity Institute and supported by Zurich Insurance Group.

The report showed 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.

Seventy-four percent of organizations ask their key suppliers about their business continuity arrangements; a considerable increase from last year’s 63 percent. This behavior coincides with other areas of good practice, especially organization-wide reporting of disruption, which increases supply chain visibility.

Another important result outlined by the report is the use of technology and big data to overcome skills and resources gaps in supply chain management. The report shows that 63 percent of organizations do not use any technology to analyze, track, and monitor the performance of their supply chains.

Technology is not the only low uptake by organizations. The report highlights an increase in availability of insurance products against supply chain losses in the market. However, it showed that 51 percent organizations still do not insure against supply chain disruption at all.

The report concludes by underlining two other important aspects in supply chain resilience. The first is how reputation is still an important aspect in supply chain disruption, which 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 great resource for effective supply chain management.

Other findings of the report include:

Top causes of supply chain disruption: unplanned ICT and telecommunication outage, cyber-attack and data breach, and loss of talent and/or skills. Fire is the biggest increase this year in terms of threats to supply chain, jumping from 14th last year to the seventh biggest cause of disruption this year. On the other hand, terrorist acts and currency volatility have dropped out of the top ten.

Impacts and/or consequences of disruption: loss of productivity (55 percent), increased cost of working (46 percent), and customer complaints remain as the top three impacts of supply chain disruptions.

Economic impacts of disruption: more respondents (53 percent) reported losses for less than 50,000 euros compared to last year (33 percent). However, losses of more than one million euros have decreased from 34 percent to 22 percent.

“Supply chain disruptions have become increasingly tough for organizations to deal with,” said 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.”

“It is encouraging to see some progress in terms of the reduction in the level of significant supply chain disruptions,” said Nick Wildgoose, Global Supply Chain Product Leader at Zurich Insurance Group, “but at 65 percent it is still very high. It is important that in terms of your critical value or supply chains you understand your level of resilience and at the very minimum you are able to react quickest to a disruption event. Sometimes being second is not good enough.”