Report identifies root causes of supply chain failure


Knowing what issues directly impact a supply chain will allow a company to better prepare for and mitigate the risks associated with disruptions of its manufacturing processes. This being the case, those in charge of supply chain management should be interested in a report released by the Business Continuity Institute last month.

In surveying respondents in 62 countries, researchers were able to compile a list of the most serious and common supply chain disruptions.

This year alone, 85 percent of respondents have experienced an issue that caused delays throughout the supply chain, the researchers found. Among such incidents, 40 percent originated below the immediate supplier, according to the report.


"Supply chain risk management is gaining more recognition each year, and for good reason," David Noble, CEO of the Chartered Institute of Purchasing & Supply, said. "Disruptions to supply chains are becoming virtually commonplace, and as the BCI report shows a high proportion of disruptions happen further down the supply chain in places many companies don't look, such as second or third tiers suppliers."

Inclement weather conditions were the top cause of supply disruptions for the second straight year, as 51 percent of respondents blamed Mother Nature for their issues.

Unexpected IT and network outages were second on the list, cited by 41 percent of respondents.

It's important to note that such incidents may become more common moving forward, as more companies than ever are relying on electronic information and some are shifting IT operations to the cloud. This is one particular area where risk assessment could prove beneficial.

Third on the list was cyberattacks, according to the report, as this is another area that has grown in prominence during the past several years.

In terms of the consequences of supply chain disruptions, 50 percent of respondents cited a loss in productivity as the most severe, followed by increase cost of working at 38 percent and loss of revenue at 32 percent of respondents.

"The survey underlines the need for robust and regularly reviewed business continuity programs throughout the supply chain," Ruth Robottom, supply chain development manager at DHL Supply Chain, told researchers.

Last month, the Kellogg Company announced that it has taken several supply chain community management steps aimed at better mitigating risk. CEO John Bryant even credited such moves as helping the company increase sales 5 percent to $3.3 billion last quarter.