BCI is pleased to launch the Supply Chain Resilience Report 2024, sponsored by Zurich Resilience Solutions. This report examines the last year’s level of disruption to global supply chain practices and procedures, as well as professionals’ top concerns regarding supply chains over the next five years.
This year’s study found that almost 80% of organizations’ supply chains have been disrupted in the past twelve months, with most experiencing between one and ten disruptions. This is an increase on the levels of disruption from the previous year and, despite the best practices that many organizations are now following, there is still more to be done to ensure that supply chains are more resilient to shocks.
More level mapping than ever
Previous reports have highlighted the need to dig deeper into supplier tiers in order to combat the root cause of disruption, and it appears to be an area that has seen significant improvements this year: 17.1% of respondents are now analyzing their critical suppliers up to level 4. and beyond. This is a significant increase from 3.7% in the 2023 report indicating more comprehensive tier mapping to fully understand supply lines and the risks posed by disruptions.
Third-party failures are the most common cause of disruption
Despite greater due diligence from suppliers, 43.6% of organizations experienced supply chain disruptions due to third-party failures. Cyberattacks are the second leading cause of disruption, followed by bad weather and natural disasters.. Most organizations have identified the primary cause of disruption as the first two tiers of their supply chains.
Increased reporting and use of technology
Reporting on supply chain and technology usage has increased this year, with a shift toward reporting on company-wide supply chain performance replacing reporting on specific functions . This reflects a substantial increase in the popularity of technology to record supply chain disruptions. Despite technological advancements to aid in supply chain management, Excel spreadsheets top the list of preferred tools, followed by incident response data and BCM software.
Increased reliance on insurance coverage, with almost half of organizations now insured against major supply chain disruptions
This year’s study shows that organizations are increasingly aware of the financial cost of supply chain disruptions and more are recording these costs. Alongside this increase in registrations, there is also an increase in the use of insurance. While a multi-tiered approach to supply chain resilience incorporating plans is important, last year saw an increase in the number of respondents using insurance to cover the cost of major disruptions, which rose from 37.4% in 2023 to 46.7% over the last twelve months.
A worrying decline in management commitment
Despite a welcome increase in the adoption of business continuity plans and supply chain mapping, this year’s report notes a substantial decrease in senior management engagement in managing business risk. supply chain: 20% of respondents now report low or no engagement. The reasons given for this alarming decline are economic challenges and competing budget priorities.
A look to the future
This year’s study shows that future supply chain risks are being closely monitored; an encouraging trend that highlights a growing awareness of supply chain resilience.
Cybersecurity, climate threats and natural disasters remain major threats in the medium term. However, this year’s top supply chain risks also include civil unrest/conflict, human and animal diseases, labor disputes, supply chain insolvency, product quality, environmental incidents and new laws and regulations. All of these issues have been flagged as the biggest concerns for practitioners over the next five years.
Rachael Elliott, Knowledge Strategist at BCI, commented:
“It’s refreshing to see a step change in the number of organizations exercising greater due diligence deep within their supply chains. It is also encouraging to see that organizations are now investing in a multi-tiered approach to supply chain resilience by adopting more rigorous approaches to resilience, coupled with increased use of supply chain assurance. ‘supply. However, while a fifth of organizations still say that management lacks commitment to supply chain resilience and disruptions are increasing in number and diversity, it is clear that we are still far from a universally adopted “best practice” approach to ensuring that supply chains are resilient to climate change. shocks.”
Björn Hartong, Global Head of Supply Chain and Marine Solutions at Zurich Resilience Solutions, commented:
“The list of interconnected risks that business leaders and supply chain managers must address appears to be growing. Cyber and climate risks are once again at the forefront, but they are being joined by new entrants due to the current global geopolitical environment. And while these risks pose very real business challenges, they also present opportunities for those who take a holistic approach to risk management, business continuity and building long-term resilience.
About Zurich Resilience Solutions:
Zurich Resilience SolutionsZurich Insurance Group’s risk advisory business, draws on 150 years of industry experience and 75 years of risk engineering expertise to meet the risk management needs of existing and new clients. The unit provides specialist information, tools and solutions to help businesses address traditional and evolving risks, such as climate change and cybersecurity.
As a global entity, Zurich Resilience Solutions has more than 950 risk experts stationed in 40 countries, bringing local expertise and sector specializations to clients around the world. Its capabilities and solutions are accessible to any organization seeking a proactive approach to risk management and long-term resilience.