Covid-19 drives record supply chain disruption and renewed focus on risk, finds BCI survey

Organisations from across the world reported more supply chain disruption in 2020 than any time in the last 12 years, with Covid-19 the main cause and having a big impact on Tier 2 and beyond, finds the BCI Supply Chain Resilience Report 2021. The survey of more than 173 individuals – including risk managers and business continuity professionals – from 62 countries, found that 28% organisations had more than ten supply chain disruptions last year. This is up from 4.8% in 2019 and is the highest since the BCI began its poll 12 years ago. Organisations blamed Covid-19 for the dramatic increase, with European respondents also saying that Brexit-related issues were a problem. The report finds that Covid-19-related disruptions were more likely to occur beyond Tier 1 than other disruptions. Some 40% of pandemic disruptions were in Tier 2 or beyond, compared to 32% from other causes. The research shows that cross-border land transport was the primary cause of logistics disruption in 2020 – suffered by 84% of respondents. Next came delays in domestic land transportation (70%), delays in sea transportation (65%) and air (63%). And the BCI says that logistical problems are set to continue this year at least. “All methods of transportation have been affected because of Covid-19. At the start of the pandemic, air freight providers repurposed passenger planes to make up for the lack of belly cargo availability, land transport had its own challenges with goods being held up at borders and sea freight is now struggling with global container shortages. With global vaccine transportation dubbed the biggest logistics project since World War II, the logistical headwinds are likely to continue into 2021 and beyond,” it says in the report. The study goes on to reveal that senior management are more engaged with supply chain issues than ever before. Some 83% of respondents reported management commitment to supply chain risk is now medium or high. This is up nearly ten percentage points on 2019. The BCI believes this interest will remain beyond the pandemic. “The report shows how supply chain issues led to balance sheets taking a hit in 2020, which has meant board interest has become high. With governments now clamping down on issues such as modern slavery within supply chains, BC professionals are confident that this elevated level of interest can – and should – remain,” says the institute. Meanwhile, more organisations are now likely to interrogate business continuity arrangements at critical suppliers, up to 75% in 2020 from 66% in 2019. A further positive finding this year is that most organisations are now going beyond a tickbox exercise when carrying out their due diligence processes. More than half now request full details of business continuity programmes, rather than merely asking if a plan is in place. But the survey found that more due diligence is needed pre-contract. Just one in six organisations carried out due diligence on all suppliers’ business continuity programmes at the procurement stage last year, and a quarter didn’t do so until contract was signed. The report also shows that more organisations than ever are using technology to assist with supply chain management and mapping. Some 56% are now using technology to help analyse and report on supply chain disruptions, with the number using technology to help with supply chain mapping seeing a major increase to 40.5%, from 22.6% in 2019.More than half of organisations (57.6%) reported that Covid-19 has been the reason for investing in new technology and tools. “While positives can be taken from 2020, there is still work to be done before supply chain disruptions become more manageable… Many organisations are still failing to carry out appropriate levels of due diligence on their suppliers, particularly those beyond their immediate suppliers,” states BCI chair Christopher Horne in the report. “Nevertheless, 2020 has been a force for change and the positive increases we have noted this year in terms of the depth of due diligence, mapping processes and closer relationships with suppliers will mean organisations are better positioned to deal with future global disruptions. We just have to ensure the lessons learnt are not forgotten,” he adds. The survey also finds that although more organisations reported partial or full insurance cover for supply chain disruption last year, a growing number fear that the insurance market won’t meet their needs going forward.

Covid-19 drives record supply chain disruption and renewed focus on risk, finds BCI survey

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Related Articles