Be prepared in case of supply chain disruption

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Managing supply chain risks should be an essential part of business continuity planning

Companies across all manner of industries rely on their suppliers to ensure the delivery of their own products or services and, as such, it is imperative that business leaders have a strong grasp of how any disruption in the supply chain could impact their firm.

Business continuity planning is therefore essential homework for any business keen to safeguard its future, as one can never be sure when a key supplier could face difficulties of their own, meaning always having a backup plan is essential.

According to the latest Supply Chain Resilience report from the Business Continuity Institute (BCI), 76 per cent of the more than 500 business respondents that took part in the survey stated they had suffered some form of disruption within their supply chain during 2014.

Moreover, 28 per cent stated they had no continuity arrangements in place at the time, resulting in a serious impact on their business as a whole.

Lyndon Bird, technical director at the BCI, commented: "As long as organisations are failing to put business continuity mechanisms in place, and as long as top management is failing to give the issue the level of commitment it requires, supply chain disruptions will continue to occur and they will continue to cost the organisation dearly.

"In our globally connected world, these supply chains are becoming ever more complex and more action is needed to make sure that an incident in one organisation doesn’t become a crisis for another."

The results of the BCI's report went on to show that almost four-fifths (78.6 per cent) of companies do not have a fully visible supply chain, in so much that they are aware of their own suppliers, but not where these businesses source their materials and products.

Loss of productivity was shown to be the chief outcome of poor business continuity planning, with this being a significant factor for 58 per cent of respondents.

Meanwhile, 47.5 per cent cited increased costs and 44.7 per cent highlighted a loss of revenue as being other major implications of supply chain disruption.

Overall, the results revealed the main causes of disruption were unplanned IT and telecommunications outage (52.9 per cent), adverse weather (51.6 per cent) and outsourcer service failure (35.8 per cent)

Of those respondents who took part in the research, the figures revealed a disparity between the size of businesses and their likelihood to have business continuity plans in place, with 63.9 per cent of small to medium-sized enterprises having made progress in this area, compared to 76.2 per cent of larger firms.

Mr Bird concluded: "Should we be alarmed by some of the figures revealed in this survey? Perhaps so. Should we be surprised by them? Probably not."