More than 90 percent of companies say supply chain disruptions have a significant impact on a company's business and financial performance, according to a report from the MIT Forum and PricewaterhouseCoopers (PwC).
The report is based on the 2013 Global Supply Chain and Risk Management Survey, conducted by the two organizations.
A total of 209 global companies completed the survey, which asked participants their views on how key supply chain complexity drivers have evolved over the past three years. Ninety five percent of respondents said that dependencies between supply chain entities have increased; 94 percent stated that changes in the extended supply chain network configuration occur more frequently; and 94 percent stated that new product introduction has been more frequent.
Despite this ground reality, 60 percent of the companies pay only marginal attention to risk reduction processes. PwC says these companies are categorized as having immature risk processes, because they mitigate risk by either increasing capacity or strategically positioning additional inventory.
The other 40 percent do invest in developing advanced risk reduction capabilities and are classified as having mature processes. The data shows that companies with mature risk processes perform better both operationally and financially. According to the report, managing supply chain risk is good for all parts of the business — product design, development, operations and sales.
Given the impact of supply chain disruptions, companies that invest in supply chain flexibility are more resilient to disruption than mature companies that don’t, says MIT Forum founder David Simchi-Levi. Flexibility is critical in adapting to changes in demand and technology, labor strikes, currency volatility, volatile energy and oil prices, he says.
PwC says the survey findings validate five key principles that companies can use to better manage risks to their supply chains and prepare for future opportunities:
