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6 Supply Chain Disruption Trends to Watch

New report from the Business Continuity Institute and Zurich highlight some of the key supply chain disruption trends that all procurement professionals should be aware of.

In its new “Supply Chain Resilience: 10 Year Trend Analysis” report, the Business Continuity Institute reveals some hard truths about the modern-day supply chain, which is being impacted by a number of different disruptors. Here are the key trends that the global organization highlights in its latest report on supply chain disruption:

  1. Supply chain disruptions dropped over the last decade. According to BCI, 56.5% of organizations experienced a disruption in 2018, compared to 72.3% in 2010 (a drop of 15.8%). However, the proportion of these disruptions that occur in Tier 1 has decreased from 60.1% to 52.1% from 2010 to 2018, compared to a rise from 8.4% to 11.0% in Tier 3. “While the deeper due diligence organizations are now performing on their supply chain is to be welcomed,” the report’s authors point out., “there is clearly still work to be done to ensure better business continuity arrangements are in place within the most visible part of the supply chain, Tier 1.”
  2. But the number of disruptions that originate at Tier 3 is increasing. In both 2011 and 2018, BCI says that the majority of companies surveyed reported that the most common source of supply chain disruptions was Tier 1 (52.1% and 60.1%, respectively). The number of disruptions that originate at Tier 3 have also increased, although at a lesser rate than the increase seen at Tier 1. For example, in 2011, just 8.4% of those firms surveyed reported that Tier 3 was the origin of a supply chain disruption. By 2018, that number had risen to 11.0% (an increase of 2.6%). “The increase underlines that supply chain disruptions are more likely to occur beyond Tier 1 and Tier 2 in today’s interconnected world,” BCI states in its report, “but equally indicates the increased depth of diligence organizations are performing within their supply chains beyond Tiers 1 and 2.”
  3. The threat landscape is shifting. Between 2009 and 2018, BCI says the top five causes of disruption were:
  • Unplanned IT or telecommunications outages
  • Adverse weather
  • Transport network disruption
  • Outsourcer failure (or, the failure of a third-party that’s handling logistics, IT, financial services, or customer support for other firms)
  • Loss of talent/skills

The organization says that unplanned IT or telecommunications outages and adverse weather were consistently ranked as the top two causes of supply chain disruption over the past 10 years. “After a brief hiatus from the top five in 2016-17, adverse weather returned to second place in 2018 due to events such as Hurricane Harvey in North America, severe snowstorms in Europe and North America, and extreme heatwaves in Australasia,” BCI points out. “While organizations cannot control weather events, they can take necessary measures to mitigate their impact, such as taking out the right insurance policy and determining which critical suppliers may be hit by severe weather due to their geographical location.”

  1. More organizations are reporting and tracking their supply chain disruptions. According to BCI, we’re seeing more organizations recording, measuring, and reporting on performance-affecting supply chain disruptions than ever before. More than half (58.6%) of the firms that it surveyed were engaging in some level of reporting in 2010, versus nearly three quarters (73.0%) in 2018. in addition, the scale of reporting has increased considerably throughout the last eight years. “Although reporting on disruptions helps organizations gain visibility over their supply chains,” the group explains, “more than a quarter (27.0%) of those surveyed in 2018 stated that their organization continues to not report on supply chain disruptions.”
  2. ISO 22301 changed how organizations address business continuity. Today, nearly half (45.2%) of companies are using ISO 22301 to confirm that business continuity plans are in place. Officially known as “Societal security – Business continuity management systems – Requirements,” ISO 22301 was published in 2012 and serves as a management systems standard for business continuity management for organizations of all sizes. BCI says that the number of organizations requesting alignment to a known standard was 51% last year, up from 36.5% in 2012. “Furthermore, checks as to whether a supplier has certified to a known standard increased from 11.8% in 2010 to 51.0% in 2018,” it adds.
  3. Companies can’t afford to ignore emerging threats. Cyber-attacks and data breaches are two key emerging threats that BCI tells companies to keep a close eye on. It says the emergence of new technologies (such as blockchain, the Internet of Things, and artificial intelligence) and the digitalization of the supply chain have both further exacerbated the cybersecurity concern, which is “likely to grow in significance as cyber-attacks and data breaches become more sophisticated over time.”

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