The global supply chain faced most of the same threats last year, but also confronted some growing risk around mergers and acquisitions. A comparative analysis of supply chain events in 2016 indicates that more frequent, low-impact events are not only the majority of supply chain incidents, but also should be as highly prioritized as the more disruptive ones, according to a new supply chain event report from Resilinc. The annual report also reveals that mergers and acquisitions accounted for the majority of EventWatch bulletins in 2016, representing 20 percent of all bulletins.
Resilinc’s EventWatch annual report is based on the company’s supplier intelligence big data repository that includes risk information from more than 90,000 supplier sites. This represents more than 1.8 million parts in the supply chain across four main segments – life sciences, automotive, high tech and other (including freight, natural resources, oil & gas, etc.).
“2016 saw a higher frequency of low impact disruption events over the previous year,” said Shahzaib Khan, director of EventWatch at Resilinc, in a statement. “Business-related events such as mergers & acquisitions, business sale and reorganization/management change were the most common events notified.”
However, earthquakes resulted in the biggest impact on supply chains. “The earthquakes that impacted southern Taiwan and Japan in the first half of the year, and the bankruptcy declaration of Hanjin Shipping caused considerable disruptions to global supply chains,” stated Khan.
By analyzing nearly 1500 unique supply chain notifications and alerts last year through its EventWatch 24x7 global event monitoring, alert and analysis service, the company ranked the top five events by estimating the aggregate revenue impact on manufacturers across the supply chain. All five of the top events occurred in Asia-Pacific and are related to natural causes. The ranking provides estimates of revenue impact, average site time-to-recovery (TTR), the number of parts affected and the number of sites affected.
Interestingly, the majority of supply chain events in 2016 occurred in North America, overtaking Asia.
The top 5 events of 2016 were:
- A 6.4 magnitude earthquake in Taiwan, February
- A series of earthquakes in Japan, April
- Typhoon Haima which hit Taiwan, China and the Philippines
- Typhoon Napartak
- Typhoon Megi, which both affected parts of Taiwan and China.
The analysis also looks at 2016 incidents by risk type, industry, geography, severity, and seasonality and compares the data to findings in 2014 and 2015. As an example, despite an increase in the total number of factory fire events notified in 2016, these types of events dropped slightly from 17 percent in 2015 to 13 percent in 2016, falling to the 2nd position for the first time.
The report also finds that the number of events for reorganization/management change rose from 0.4 percent in 2015 to seven percent in 2016, and earthquakes rose from the fifth position in 2015 to number four this year.
What’s different about this report from others in the market is that “it is driven by data collected from thousands of companies, and focuses on impacts to specific brands, suppliers, sites, and parts, based on a calculation of value-at-risk for manufacturers and incorporates confirmation of impact to supply chain operations,” according to the company.
Looking ahead, Resilinc believes that two important changes in 2016 – Brexit and the election of Donald Trump as the president of the U.S. – may potentially have medium- to long-term impacts on the supply chain. In the U.S. the impact will be around policy changes that include TPP, import taxes on products from China or Mexico, NAFTA and corporate taxes, according to the report.
“While the impact to supply chains worldwide is not yet known or realized, these 2016 developments have the potential to change the makeup of global supply chains in the years to come,” the company said.