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Monday 16 July 2018


Business continuity vital to supply chain resilience

Written by staff reporter

Organisations 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. This is according to a report published today by the Business Continuity Institute and Zurich Insurance Group.

Some 74% of organisations ask their key suppliers about their business continuity arrangements; a considerable increase from last year’s 63%. This behaviour coincides with other areas of good practice, especially organisation-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% of organisations do not use any technology to analyse, track and monitor the performance of their supply chains.

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

Commenting on the findings, research manager at the BCI, Gianluca Riglietti said supply chain disruptions have become increasingly tough for organisations to deal with. "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," she explained. "Professionals understand this, which is reflected in the higher number of respondents (74%) adopting business continuity arrangements to deal with supply chain disruptions. However, there is still room for improvement, as more than one in five (22%) do not have full visibility of their supply chains. On a different note, it is also interesting to observe that the majority of respondents do not use technology to analyse the performance of their supply chain, which might raise the question of how a higher uptake of modern solutions could affect performance.”

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 organisations 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.

Global supply chain product leader at Zurich Insurance Group, Nick Wildgoose, said he was encouraged to see some progress in terms of the reduction in the level of significant supply chain disruptions, but at 65% 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", he said. "Sometimes being second is not good enough."

Supply chain resilience report -- key findings (Source: Business Continuity Institute & Zurich Insurance Group)

⦁ 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 fourteenth 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%), increased cost of working (46%), and customer complaints remain as the top three impacts of supply chain disruptions.

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

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