Why don't companies look closer at disruptions?

To improve their supply chain continuity, companies can always count on data and reporting to point out key factors. For data to make the best impact, though, a business may need to be vigilant enough to examine it in the first place. Business Continuity Institute and Zurich Insurance Group recently released their 2016 Supply Chain Resilience Report on the way current supply chains operate.

RetailWeek cited the highlights of the report, which show a possibly alarming lack of awareness when it comes to disruptions. According to this source, the report found that two out of five companies do not analyze the full cause of supply chain disruptions.

Furthermore, two out of three of these companies don't maintain complete visibility of the supply chain, a possible sign of further issues to come. Despite a recent concern with hacking and online breaches, this report found that the largest cause of disruptions was unplanned IT and telecommunications outages, which accounted for 60 percent of the instances. Retail Week acknowledged increased risk by adding that as much as 85 percent of retailer-friendly manufacturers' product components can come from unapproved suppliers.

Given this, it's worth asking: Why are disruptions ignored? What makes it difficult to take action after problems arise?

While it's far from a comprehensive list, here are some possible factors which could prevent businesses from responding the way they'd like to after a problem arises:

1. Return on investment
In a report from DHL published earlier this year,  Hochschule Fulda University of Applied Sciences Business Administration and Logistics Professor Michael Huth said that risk is a matter of "probability" rather than binaries.

"If it changes the probability distribution of possible outcomes with suitable risk management measures, a company changes the amount of equity required to hedge possible risks, and that reduces the cost for this capital," he said.

By that logic, we can assume that a business that sees low ROI to a measure might not choose to pursue it.

2. Structural issues
The growing nature of risk means that companies have to adapt. As a Forbes piece recently argued, changes in conditions could leave businesses unsure of how to function. If businesses simply aren't used to operating in a high-risk environment, they might not know that they're ignoring the right steps to improvement. Establishing a flexible structure can be important for responding when risks are more prominent.

3. Lack of continuity
IT systems should be not just be up-to-date but also in sync with each other, the source also stated. In a grander sense, resilience can mean shared information that contributes to a stronger network. Continuity can be a big term, and include not just new technology but business practices which support it.

The goal should be communication and a clear set of principles throughout the supply chain. Following this, businesses might find themselves implementing better changes if they have consistent tools at the ready.

With better strategic sourcing methods, supply chain businesses might find a way to take risk more seriously. If further disruptions arise, the company has to be in a position where it can use new data to stay efficient.