Supply chain disruptions globally nearly doubled in 2017, according to Resilinc’s annual report. The analysis covers incidents by risk type, industry, geography, and disruption potential, highlighting global supply chain risks for 2018.
The 2017 EventWatch Supply Chain Disruption Annual Report finds the increased disruptions potentially impacted 32 percent of S&P 500 companies over the past year. Another finding indicates that natural disasters and weather-related events were a significant source of disruption globally, and particularly in the U.S., which became the most impacted region in the world for the first time.
The report analyzes global supply chain notifications and alerts generated by Resilinc’s EventWatch service, which monitors natural disasters, extreme weather, fires, environmental hazards, geopolitical occurrences, and other business developments including mergers and acquisitions. The company’s supplier repository includes risk information associated with more than 85,000 supplier sites, representing more than two million parts.
EventWatch notified customers of 1,931 supply chain events in 2017 of which 562 required an impact notification, said Resilinc. This nearly doubled from 298 notifications in 2016.
More than 19,000 unique suppliers were contacted for potential impacts, which generated 10, 114 responses. This translated into a response rate of 53 percent, up 10 percent from 2016. Of those response, 125 suppliers confirmed an impact and provided customers with a time to recovery (TTR). An impact notice provides intelligence regarding a customer’s suppliers, parts, supplier sites, products in the impacted region, potential revenue impact and average TTR.
“Analyzing and evaluating past events are an opportunity to learn, hone the process, train the team and identify failure points where improvements are needed, as well as celebrate the wins where recognition can be handed out,” said Bindiya Vakil, CEO of Resilinc. “In today’s high pace business climate, people may forget about the past as they constantly need to move on to solve the next pressing problem. Looking back at last year’s events and doing an evaluation helps identify in hindsight those areas where gaps existed and where improvements are needed.”
In 2017, the automotive industry was the most disrupted segment, recording an increase of 30 percent of Resilinc’s bulletins published. However, all industries experienced increases of around 300 bulletins or greater in 2017, according to the report.
In 2017, Hurricanes Harvey, Irma, and Maria had some of the biggest impacts on business and rank among the top five events last year.
- Late winter storm in northeast USA, March
- Weather related damage closes US/Mexico Laredo border, May
- Hurricane Harvey in USA, August
- Hurricane Irma in USA, September
- Hurricane Maria in Puerto Rico, September
The analysis also reveals that factory fire/explosions was the most common disruption in 2017 generating 18 percent of EventWatch bulletins. This was followed by mergers and acquisitions, business sale or spin-off, and factory disruption/shutdown.
“This should be a wake-up call for business leaders around the globe,” said Vakil. “2017 was a turbulent year for US companies and their supply chains, causing a hidden drag that must be addressed. With 32 percent of S&P 500 companies potentially impacted, that is a staggering figure.”
Vakil said companies need to evaluate their current resiliency practices and answer some basic questions including:
- Where are my suppliers actually operating worldwide?
- Which countries do my parts actually touch?
- Which of my highest revenue products are dependent on the highest risk regions of the world?
- What event may happen today that could potentially impact the supply chain in the coming weeks or months?
“Even companies looking to near shore or onshore their operations are finding that many regions in the USA experienced severe disruptions in 2017. Thus, nearshoring or onshoring is not a failsafe risk management strategy,” she continued.
“Investing in automated solutions and the right intelligence can make the difference between meeting revenue goals vs. missing a quarter and taking a stock price hit,” she added.
Based on its analysis of 2017 events, Resilinc has compiled a list of five ongoing events that should be monitored closely in 2018. These include geopolitical developments in North Korea, China’s response to pollution and its impact on manufacturing; cyber-attacks, which increased significantly last year, and cybersecurity; NAND flash chip shortages, and increased volatility of storms and natural disasters.
Resilinc is offering a 30-day free trial of Resilinc EventWatch.