Manufacturing hit hardest by supply chain failure according to Business Continuity Institute report
Research by the Business Continuity Institute and supported by Zurich Insurance reveals that manufacturing is being hardest hit by supply chain failure. Manufacturers have reported a 58% increase in disruption to their supply chains over the last 12 months; this compares to 35% across all industry sectors. The report on the research entitled “Supply Chain Resilience” surveyed 201 organizations across all sectors, industries and locations where they had operations.
The objective of the research was to understand levels of supply chain disruption being experienced, the impact of the disruption and what organizations were doing to tackle the problem and, in particular, the extent to which the Business Continuity Management (BCM) methodology was being used to deal with the impact of such disruption.
A leading cause of the disruption has been the financial failure of suppliers but failure of IT and telecom system suppliers and disruption through adverse weather events have taken their toll as well. The main impact for manufacturing has been delayed product availability, with loss of revenue and productivity compounding the problem. In terms of tackling supply chain vulnerabilities, manufacturers have also recorded that they find it much harder to get their supply chain to meet their business continuity needs compared with other sectors such as the financial services sector.
The research also revealed that businesses with off-shore suppliers and outsourcers experienced above average levels of disruption; while international businesses with operations in Middle East, Africa and Latin America reported significantly higher levels of disruption and increased occurrences of contract suspension through force majeure invocations.
Lyndon Bird FBCI, international and technical director at the BCI, commented: “We’re now seeing the downside of years of outsourcing, extended supply chains and focus on core competency; organizations are now much more vulnerable to supply chain disruption than in the past. While companies have banked the cost savings, this research indicates they have still to make the corresponding investment in resilience. The economic recession, in particular, is exposing vulnerabilities and dependencies through supplier insolvencies, reduced capacity and the tightness of credit markets. Business continuity management provides a robust and proven approach to prepare an organization for and protect against disruption in its supply chain.”
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Business Continuity can be a challenge in any environment – and the complexities of manufacturing and distribution operations can be even more challenging.
The new BUSINESS CONTINUITY PROGRAM FOR MANUFACTURING AND DISTRIBUTION ON CD-ROM has some similarities to business continuity programs for other business environments – but many differences specific to manufacturing and distribution.
- Have Critical Revenue-Generating Operations been Thoroughly Analyzed?
- Is Your Plan Designed Specifically for a Manufacturing or Distribution Business?
- Is Your Plan Limited to Information Technology Planning?
- Do All Departments have Adequate Plans in Place?
If the answer to any of these questions is “no” or “unsure,” then this planning template can help!
