Supply chain disruptions on the rise

Disruptions to a company's supply chain can be devastating, resulting in lost revenue, a damaged reputation and strained relationships with suppliers or manufacturers. According to a survey by the Business Continuity Institute, more than 70 percent of companies reported a supply chain disruption of some sort in 2012, indicating that there is more businesses can do to prevent these disasters.

Frequent disruptions
Disruption can occur at any point throughout the supply chain, and it is essential for organizations to keep track of exactly where and how their problems are occurring. This can help them eliminate the issue and take measures to ensure it doesn't continue to happen in the future, eliminating risk down the line.

The largest cause of disruption was unplanned IT outages, and these situations affected 52 percent of companies surveyed. This problem was followed by problematic weather, and 48 percent of organizations that took part in the survey had their supply chains negatively impacted by hurricanes, storms, earthquakes or flooding.

The survey results show that problems due to outsourcing now amount for a significant portion of all problems, and the issue jumped to third place in the list of largest supply chain disruptions. In fact, it has increased 17 percent and now responsible for 35 percent of problems or delays in the supply chain.

The cost of disruption
Dealing with supply chain problems isn't just a minor irritant; in fact, it can have a serious impact on a company's bottom line. Issues such as IT problems, inclement weather and outsourcing dilemmas are now most costly than they were in the past, with one in five companies reporting a single incident loss of more than $1.277 million. However, these issues don't just negatively impact a company while they are occurring. They also cost businesses significant funds in the long run, as consumer confidence wavers, investors lose confidence and an enterprise's reputation is damaged.

Companies must work harder to ensure they are mitigating risk wherever possible in their supply chains to limit the chance of monetary loss, negative press and low consumer confidence. By thoroughly examining each component of its supply chain, including strategic sourcing, manufacturing operations, logistical challenges and warehousing, a company can better determine how it can reduce its risk of encountering devastating supply chain disruptions.