7.11.2015


Several recent surveys and studies report similar -- very high -- levels of concern related to supply chain risk.

The World Economic Forum's 2015 Global Risk Report notes, "The far-reaching global supply chains set up by multinational corporations are more efficient, but the complexity and fragility of their interlinkages make them vulnerable to systemic risks, causing major disruptions."

The insurance firm FM Global defines resilience itself, "as a combination of the vulnerability of a country to supply chain disruption and the country’s ability to recover from such disruption."  The FM Global 2015 Resilience Index treats the United States as three mega-regions each with different scores on the resilience index.  Only the central United States ranks in the top ten of the world's most resilient (at number 10).

A survey of corporate procurement officers by the British tech firm Xchanging (graphic above) found that potential supply chain disruption and corruption is, by far, their principal worry.

This prospective concern regarding supply chains reflects recent experience.  According to BSI (British Standards Institution) in calendar year 2014 business losses due to supply chain disruption increased again. Over $32 billion in losses were generated by the top four natural disasters alone.

Shereen Abuzobaa, Commercial Director at BSI Supply Chain Solutions said, "Our experience shows that while companies are aware of and test for internal risks, they are failing to map or assess risk effectively across their supply chain. More often than not, only the first tier of suppliers is considered with no thought given to those further down the supply chain."

Linda Conrad at Zurich Insurance Company says, "Research shows about 40% of supply chain disruptions involve problems that occur at suppliers that are below tier one. We find that most people don’t have a lot of information down the tiers or even what their potential business interruption is should something go wrong.”

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