The Biggest Disruptions faced by the Supply Chain Industry
It’s no surprise that supply chain disruptions are on the increase. According to a study by Resilinc, supply chains were at their highest rate in three years at the end of 2018. Of disruptions that directly affected the continuity of supply and demand, many were due to natural disasters and weather related incidents. Other indirect disruptions such as tariffs, price fluctuations and cyber attacks had a huge negative impact on the supply chain industry. Despite reaching the highest level of disruptions to date, the level of disruptions does not seem to be stagnating. So, what are the biggest disruptions facing the industry right now? And how can an average supply chain deal with these disruptions in order to keep their chain as effective and responsive as possible?
Environmental Disruptions:
The affects of climate change is having a serious impact on the infrastructure of supply chains across the globe. In the EventWatch report, environmental disruptions caused by extreme weather and natural disasters ranked highly among common disruptions. Extreme weather conditions ranked just outside of the top 5 disruptions and its contribution to supply chain disruptions has grown significantly since 2017, almost doubling. Unfortunately, supply chains cannot control the weather and the disorder that comes with it but they can control the level of damage that these disruptions have on their chains. Of course, businesses big and small should take into consideration emissions and attempt to make reductions where possible but other steps need to be taken. Planning for these events to happen and having a contingency plan for when these events do happen is the best way to minimise damage on the chain. While environmental disruptions are unavoidable, planning for these events puts you ahead of your competition.Political Disruptions:
The political climate at the moment is best described as tumultuous. With events such as Brexit and the increasing frequency of trade wars and tariffs, the amount of issues that supply chains are having to deal with are increasing at an alarming rate. Where a lot of supply chain professionals will have to deal with political disruptions reactively rather than through pre-planning, EventWatch's report suggests that ‘the most well prepared for the variety of possible outcomes will likely be companies that have engaged in comprehensive analyses of their supply chain vulnerabilities.’Financial Disruptions:
At the top of the EventWatch report, Mergers and Acquisitions ranked at the top of supply chain disruptions for 2018. Instead of directly impacting the supply chain, effects are usually felt indirectly or with a slight delay. But this doesn’t mean the effects are any less disruptive. Bringing new talent immediately into the supply chain can have effects on decision making, ultimately causing conflicts with suppliers and partners. Similar to with other forms of disruptions, the disorder caused by financial issues in the supply chain can be managed with some level of pre-planning and risk management. In a conversation with Andrew Dougal of Orica, he highlighted that the best way to handle supplier issues is to conduct thorough risk assessments in order to fully understand the project and task the supply chain is undertaking. Resilinc too agree with Andrew’s statement and in their report state that supply chains should focus on eliminating financial disruptions through risk assessments.
Business Disruptions:
Similar to the financial disruptions section, changes to businesses and internal issues are also recognised as some of the highest ranking disruptions in Resilinc’s 2018 annual EventWatch report. In the top six disruptions recorded by EventWatch can see reorganisation and management change, business sale or spin-off and regulatory change, each of which have grown in frequency over the past 12 months. Luckily, a lot of these disruptions can be recognised in advanced and dealt with accordingly. The common theme when it comes to dealing with supply chain disruptions is pre-planning and contingency.
Other ways Supply Chains are being disrupted:
Supply chain disruptions don’t just fall neatly into these categories; there are of course other kinds of disruption. In the new digital age, technological disruptions and particularly cyber attacks are having a huge impact on the industry. According to the EventWatch report, ‘an attack in cyber space can immediately shut down a supply chain in the physical dimension.’ And with the growth of such attacks, supply chain professionals should educate themselves on their partner’s cyber security standards as well as their own. For other categories of disruptions, take a look at the infographic above!
Sources: EventWatch Annual Report 2018 | Resilinc
Supply Chain Industry Week surveyed over 100 senior supply chain professionals to gain a deeper understanding of the current industry climate including the current digitalisation maturity levels across an array of sectors as well as trends and focuses for the next 12 months. Download the full Supply Chain Industry 2019 Benchmarking Report here.
