January 23, 2012

Weather called leading culprit for supply chain disruptions

More than half of respondents to a global survey said they suffered supply chain disruptions at the hands of Mother Nature last year.

By DC Velocity Staff

Experiencing a supply chain disruption? More than likely, Mother Nature—in the form of weather events like tornadoes, floods, and windstorms—is to blame.

A recent survey by the insurer Zurich Financial Services Group and the U.K.-based Business Continuity Institute looked at the causes and consequences of supply chain disruption. Topping the list of causes was bad weather, with 51 percent of survey respondents reporting that they had experienced weather-related disruption in the past 12 months.

Unplanned telecommunications and information technology outages were the second most-common reason for a disruption, cited by 41 percent of survey takers. Tied for third, with 21 percent, were transport-network disruptions and an earthquake and/or tsunami.

The consequences of a supply chain break can be severe, the survey results suggested. Forty-nine percent of respondents said it can lead to lost productivity, and 38 percent said it could increase operating costs. One-third said that such disruptions cause a loss in revenue.

Just how costly can supply chain disruptions be? Seventeen percent of the respondents said the financial costs of the largest single supply chain incident they experienced in the past year amounted to $1.3 million or more.

The research, the Supply Chain Resilience 2011 Study, was conducted among more than 500 supply chain organizations in 62 countries.

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