Monday, February 05, 2007

Supply Chain Disruptions - Survey Results

Supply chain disruptions cause major headaches for shippers, carriers, and customers, often resulting in lost productivity and profits. The effects of supply chain disruptions also reverberate beyond the initial event, as companies scramble to fix problems and get back to business.

More than two-thirds of companies that experience supply chain disruptions say it takes more than one week to recover from the disruption, finds a new Accenture study that surveyed 151 logistics executives in U.S. firms with revenues of more than $1 billion.

Seventy-three percent of the executives surveyed report experiencing supply chain disruptions in the past five years. Of those, more than one-third (36 percent) say it took more than one month to recover, and 32 percent needed between 1 week and 1 month to recover.

Additionally, the vast majority of respondents (94 percent) say disruptions -- which are most often caused by problems associated with supply chain partners, raw materials, and natural disasters -- impact profitability and the ability to meet customer expectations.

When asked to rate the impact of disruptions on profitability and customer service, 50 percent and 56 percent, respectively, say disruptions have a "moderate or significant" impact.

Respondents, however, are upbeat about the future risk of supply chain disruptions. Nearly two-thirds (68 percent) say their supply chains are secure from potential disruptions, while 48 percent expect their level of supply chain risk to increase in the next three years.

Their investment plans, though, imply a lower degree of confidence: Nearly two-thirds plan to increase spending on supply chain risk mitigation, using logistics technology, forecasting/planning, and increased logistics capacity.

The study also gauged executives' expectations about upcoming supply chain disruption risks in specific areas.

Respondents replied as follows when asked which specific factors will have an increased level of risk associated with them over the next three years:

* 50 percent expect risks associated with supply of raw materials or parts to increase.
* 36 percent expect risks associated with port operations and customs delays to increase.
* 36 percent expect risks associated with service failures due to longer supply lines to increase.
* 35 percent expect risks associated with geopolitical instability to increase.

Any thoughts from your perspective? If so, let me know with a comment...

3 Comments:

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Mike, good post. I will clipmark it to Freight Dawg. Its a clipped link back here, so no content pirating.

Eric

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