Poor supply chain management causes business continuity issues

05 July 2012

Posted by Michelle Devonshire

Business continuity problems are being caused by poor supply chain planning, it is claimed.

This is the suggestion made in a new report published by Zurich Insurance, which highlights some of the more common problems experienced by firms in this area, including product quality incidents (57 per cent of organizations).

Carried out by Vanson Bourne, the research polled 500 businesses, discovering that 45 per cent had experienced supply chain disruptions as a result of adverse weather conditions, while 39 per cent had suffered an unplanned IT outage.

Entitled ‘The Weakest Link: UK Plc’s Supply Chain’, the study also reveals manufacturing is the industry that is most severely affected by such incidents, with many having particularly complex supply chains.

Firms in the industry were found to have spent an average of £228,608 during the past 12 months as a result of disruptions.

Business continuity planning is an essential part of the effective functioning of a company and it is important to ensure good standards of resilience are being achieved throughout supply chains, as these are areas where risks can be overlooked.

"The lack of preparation and business continuity planning amongst businesses, particularly those who are highly dependent on suppliers, is alarming," declared Nick Wildgoose, Zurich Insurance Global Head of Supply Chain.

He pointed out that this is despite disruptions in recent years as a result of disasters such as the March 2011 earthquake and tsunami in Japan, which caused widespread devastation and a meltdown at a nuclear power plant, as well as the floods in Thailand last year and the volcanic ash cloud a few years ago.

The risks posed by supply chain and business continuity problems include loss of orders and sales, reputational damage or rising operating costs.

According to the Financial Times, 32 manufacturing businesses in the UK have been selected to share funding totaling £90 million by the Government under a scheme aimed at helping them to access overseas markets and attract foreign investment, something that may prompt them to examine the overall resilience of their supply chains.

Commenting on the grants, Vince Cable, Britain's Business Secretary, said: "Building up the supply chain and encouraging new suppliers to manufacture here is one of the steps we're taking to strengthen the UK’s manufacturing capability."

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