Insurer ACE Europe sponsored a recent quantitative research report titled Managing Supply-chain Risk for Reward.  The research was conducted in September and October of this year by the Economist Intelligence Unit. The report examines how companies are being affected by supply chain risk and how they are responding to such risk.  Survey respondents included 500 senior executives with responsibility for risk management in their organizations. About one-half of the respondents were “C-level” or board members and industry sectors were slightly weighted toward services (34%) vs. manufacturing-related (27%). Geographical coverage was fairly balanced to include Asia-Pacific, Western Europe and North America regions.

Similar to other survey findings throughout 2008 and 2009, the increasing occurrences of supply chain risk and disruption are evident across many industry sectors. This latest survey notes that respondents feel that threats within the supply chain are unlikely to go away in the near future. The listing of top threats tends to change, but the concerns remain.  The latest survey indicates that unpredictability of demand, unfavorable currency exchange-rate fluctuation, and fears over input price hikes are at the top of this year’s list.

What interested me more was the finding that more than half of respondents now feel that supply chain risk management merits high or very high priority at board level in their organization.  As one who has tracked these surveys since 2008, this reflects to me a considerable rise in senior management concern. 

Another interesting insight brought out in this global-oriented survey reflects on the regional differences related to risk.  While only one-third of the Asia-Pacific respondents indicated that they have been affected by supplier insolvency this past year, they also indicate that they are over-reliant on a smaller number of suppliers, and nearly one-half indicate they lack expertise to perform effective supply chain management.  This should be of some concern to Asia-firms and their associated supply chains.

Since this latest survey was so heavily weighted toward a senior management view, readers should anticipate much more management focus on supply chain risk during 2010.

Bob Ferrari