The supply chain is at breaking point, with over 70 per cent of organisations recording at least one supply chain disruption in 2010, according to the Business Continuity Institute (BCI).

A new survey showed that, across 35 countries, while awareness of supply chain risks is increasing, many businesses remain exposed to high levels of risk. The survey concluded that outsourcing, in particular in IT and manufacturing, often reduces cost-benefits through greater exposure to supply chain disruption.

Unplanned IT outages was the second most likely disruption, and the failure of service provision by outsourcers was third, up to 35 per cent from 20 per cent in 2009.

Business supply chain incidents were reported to have cost between €10,000 and €500,000 in the last 12 months by 49 per cent of participants. A further ten per cent reported costs of €500,000 or more.

“The serious levels of supply chain disruption experienced by organisations around the world, coupled with the wide range of threats, underscores the business case for investment in business continuity management (BCM),” commented Lyndon Bird, technical director at the BCI. “Intelligently applying BCM to time sensitive supply chains is a vital risk mitigation technique and should especially underpin business decisions to extend or optimise supply chains. Furthermore, BCM provides peace of mind that suppliers will be able to support you when they are faced with a disruption, and that your organisation has workable plans in place to deal with and recover faster from supply chain disruption.”

Nick Wildgoose, supply chain proposition manager at Zurich Global Corporate, added: “This survey shows the need for companies to address the issue of supply chain risk. Supply chain disruptions are significant in number and companies must understand who their critical suppliers are, and look to protect them through the use of techniques such as business continuity management. Companies that are tackling this as a cross functional Board level issue are seeing performance improvements through the reduced number and length of disruptions.”

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