The Supply Chain Matters blog wanted to make readers aware of a newly released executive survey report that addresses the current cost of ongoing supply chain disruptions.

This report which is titled Cost of Supply Chain Disruption, was commissioned by GEP, a procurement and supply chain strategy, software and services provider, and conducted by the Economist Intelligence Unit (EIU).

Major port disruptions

The EIU organization surveyed 400 senior supply chain and procurement executives within five vertical industry sectors (Agriculture and Food, Industrials, Consumer Goods and Retail, Healthcare and Pharmaceutical and Energy and Utilities) among eight different countries. The authors indicate that 60 percent of surveyed executives were categorized as C-level with the remainder being director-level or above.

According to the report’s summary conclusion: . while COVID-19 was a significant factor, it was only one of the disruptive forces that strained and occasionally broke supply chains.

As to the most significant supply chain challenges global organizations are facing, this report cites compliance as the primary challenge, manifested by constantly changing trade regulations, cyberattacks, supplier risks, and managing brand reputations.

The report calculates lost revenues of between $2 trillion to $4 trillion, based on quantification that over 64 percent of companies with revenues exceeding $1 billion reporting revenue losses of between 6 and 20 percent. The report authors further pointed to 38 percent of companies with revenues exceeding $1 billion indicating significant damage to the brand and operational cost increases directly attributed to supply chain disruptions.

Specifically noted:

While COVID-19 upended every company’s, supply chains and operational plans last year, geopolitical risks — regional trade policy, instability, corruption — represent an organization’s biggest concern (31.5%) than any other factor, including increasing labor costs in supplier countries.”

Among directional or roadmap perspectives, what we found of added interest relative to this survey were statements:

Signaling a major shift in strategy, sixty one percent (60%) of respondents agree that “redundancy and resilience in their company’s supply chain are more important than speed and efficiency.”

From our Supply Chain Matters lens, the above finding seems a consistent view among senior procurement leaders. It is an example of new or revised thinking that is occurring and how capabilities are being weighted. However, alignment of such goal setting has to include business as well as other supply chain operational and planning stakeholders.

A further roadmap perspective was reported as:

More than half of the executives surveyed (54%) say that organizations must make significant changes to effectively manage supply chain disruptions in the next five years.

From our Supply Chain Matters lens, the above finding is an example of new direction setting that senior supply chain executives are establishing.  Our belief is that the notions of timetable are very much business and industry specific.


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