Nearly half of companies with global supply chains say they fear major disruptions in their abilityto source, produce and ship goods around the world. And they’re not doing much to prevent it,
according to a new survey sponsored by UPS.About 47% of companies say they need to pay more attention to risk mitigation compared tojust 16% that believe they pay an adequate amount of attention. As a result, only 38% of thosesurveyed rate the resilience of their supply chain above average, while a troubling 42% say theexpansion of their global supply chains has outpaced their ability to manage risk.
The global survey of nearly 350 senior executives was released yesterday (December 1) by UPSand the Economist Intelligence Unit. The survey itself was supplemented with interviews of academicexperts and leading supply chain practitioners.
“Businesses appear to be increasingly vulnerable to supply chain disruptions that can have acatastrophic impact on business performance,” said Dan Brutto, president, UPS International.“Success in the global economy depends in large part on building successful risk mitigationstrategies that can turn a resilient supply chain into a competitive advantage.”
Kim Andreasson, senior editor at the Economist Intelligence Unit and the editor of the report“Supply Chain Resilience”, points out that companies today already are more vulnerable as a resultof having created tighter and leaner supply chains. “A lean organization is a requirement forcompetitiveness, but that can also expose a business to an increasing number of risks,” he adds.
The survey pointed out some troubling findings, reinforcing the point that rising risks tosupply chain resilience are too often ignored in the rush of day-to-day business – and companiesknow it. This includes insufficient monitoring of suppliers, infrequent risk assessment and poorcontingency planning.
Low-cost country sourcing, which has grown significantly in recent years, brings its own setof challenges, including supply quality and delivery ability. “We don’t expect to see low-costsourcing go away,” said Brutto, “but it will look different in the future.” He also noted thatmulti-sourcing and near-sourcing to enhance resilience are likely to become part of best practicesin the future.
Companies should assess their supply chains for potential risks, develop alternative plans,ensure supply chain visibility, and develop key partnerships with logistics providers, Bruttorecommended.
