Supply chain disruptions and risks cause havoc

Whilst the recent pandemic has been one of the biggest supply chain shocks in recent memory; supply chain disruptions are increasing in both frequency and severity. From fuel shortages to global weather and environmental disasters, supply chain disruptions have caused billions of pounds worth of damage in the past few years.

In fact, McKinsey has created a scoring system for classifying shocks based on impact, lead time and frequency of occurrence. Everything from catastrophes to data disruptions and everything in between.

Disruptions are costly events and can be divided into two categories: anticipated such as trade disputes, and unanticipated such as data breaches, product recalls, logistics disruptions and industrial accidents.

Across industries, supply chain resiliency has risen to the top of the C-Suite agenda, to both more deeply understand their supply chain and implement a more robust management approach as well as deliver organisational resilience.

An organisation designed for speed and agility, supported by an effective IT infrastructure, will see powerful outcomes, including greater customer responsiveness, enhanced capabilities, and better performance, in terms of cost efficiency, revenues, and return on capital.

Organisations should foster a new, dynamic environment that moves with a clear focus on mission and heightened team focus, connecting the contributions and wellbeing of workers with the organisation’s higher purpose. They should find ways to capture the energy and rhythm of recovery, regularly review progress and instil it at all levels.

Not everything that can go wrong, does go wrong, but companies need to be prepared and cannot afford to be caught out when shocks occur. The recent pandemic is a stark reminder that whilst outlier risks may be rare, they do occur and should be factored into decision making.

An organisation’s supply chain can be a source of vulnerability of resilience, depending on its effectiveness in monitoring the various risks, planning for various scenarios or options, implementing mitigation strategies, and establishing business continuity plans.

For further information, including details on the building blocks for building resilient supply chains, download our full supply chain resilience whitepaper.