Supply chain resilience efforts start to wane, finds BCI

Efforts to boost supply chain resilience are starting to wane, despite supply chain disruption running at twice pre-pandemic levels, according to a new survey and report by business continuity body BCI. “Management attention on supply chain management is at an all-time high,” with an increased focus on supply chain resilience since the Covid-19 pandemic, said the BCI’s Rachael Elliott. Progress on supply chain resilience driven by “shock lessons” has put supply chains in a better place than pre-Covid-19, but there are early signs of momentum falling away, she said during a webinar to discuss the survey’s findings. According to the BCI’s just-released Supply Chain Resilience Report 2023, 66% of senior management are said to be more committed to improving supply chain resilience since Covid-19. But the report warns: “The initial flurry of activity to increase supply chain resilience following the pandemic is starting to diminish.” “The opportunity to use Covid-19 as a lesson to learn about supply chain resilience is slipping away,” warned Jeff McDonald, executive vice president at SGS, which sponsored the report. Launching the survey of almost 230 cross-sector business continuity and risk managers, BCI found human illness has been replaced by loss of talent as the leading cause of supply chain disruption in the past year, with signs that businesses are on top of managing the impact of Covid-19. In 2022, human illness accounted for 43% of supply chain disruptions, down almost half from 83% in 2021. Looking ahead to the next five years, human illness drops out of the top five leading causes of concern for supply chain experts, the BCI said. Loss of talent was the leading cause of supply chain disruption last year, with 47% of respondents affected. Elliott said this could also be a hangover from Covid-19 given the scale of change to industries and workplaces. However, loss of talent is less of concern moving forward, falling out of the top five sources of expected disruption over the next five years. Cyberattack and data breach was the fifth biggest supply chain concern over the past 12 months but is expected to become the leading cause of disruption over the next five years, followed by adverse weather. “State-sponsored cyberattack is a big concern for respondents going forward,” Elliott said. Elliott added that supply chains are becoming more dynamic and interconnected, which has helped to drive technology uptake. Covid-19 also helped increase adoption of technology to record and manage supply chain risks, BCI said. Some 41% of organisations now use technology to record, measure and report on supply chain disruptions, according to its latest survey. But Elliott says the figure is still “fairly low” and it is significantly down on 56% in 2021. “We’d really like to see that rise. Tech really is a help not a hindrance and we expect that to go up over the years,” Elliott said. Kris Whitfield, head of delivery, supply chain risk at SGS, a supply chain assurance and certification provider, said: “It’s interesting to see there’s still not a significant number of organisations using technology solutions to monitor and evaluate the risks being imported throughout their network.” The BCI survey also found that 36% of organisations that use technology to help manage supply chain risk, coordinate reporting across their entire enterprise. BCI said this sets a new high. But Whitfield highlighted that 60% of respondents that said they use technology to help manage supply chain disruptions still use Excel spreadsheets as their go-to tool, rather than more sophisticated options. Elliott said this can create silos across enterprises. She said some industries are more advanced in adopting newer technologies than others, in particular manufacturing. “Even just adopting a business continuity management system would help to identify supply dependencies and also those single points of failure,” Elliott said. The survey found that only 11% of respondents currently use BCM software. One in five use supply chain mapping technology. Elliott said more investment is needed in technology to better manage supply chain risks. “With Covid-19 still fresh in the mind of senior management, now is the time to request dedicated budgets to invest in technological solutions to boost resilience and improve efficiency,” she urged. According to BCI, organisations are becoming better at managing multiple impacts on their supply chains. Some 12% of respondents said they experienced more than ten supply chain disruptions in 2022. This is down from a peak of 28% in 2021 but still double pre-pandemic levels in 2020. Most commonly, 43% of businesses reported between one and five supply chain disruptions over the past year. In-depth interviews with survey respondents revealed that cyberattacks were behind the increase in incidents since 2020, rather than traditional problems such as transport disruption, Elliott said. BCI found that 37% of businesses experienced supply chain disruption with their tier 1 suppliers and a further 20% suffered problems with tier 2 suppliers. BCI said more companies are becoming better at identifying supply chain issues and recording them. The poll found 73% of firms surveyed have their own business continuity arrangements in place. While a similar number ask their key suppliers about business continuity plans, only 57% of key suppliers have arrangements in place. BCI said this exposes businesses to a near 50% chance that a supplier will not have taken steps to mitigate supply chain disruption. “This is a key figure as it is the very core of supply chain continuity,” the report says. Elliott explained that 36% of respondents said business continuity is an integral part of contract discussions with key suppliers at the procurement stage. “It really should happen as a matter of course,” she said. However, 21% of firms surveyed do not engage in business continuity discussions as part of their contract with suppliers. “Business continuity management planning is an important risk management mitigation technique and should underpin any decision to extend, alter or optimise supply chains,” Elliott said. The survey found that 58% of firms now ask for evidence of a business continuity programme from suppliers, rather than just a simple plan. This is the first time the number has been above half in the survey’s history. BCI found that 77% of respondents believe they have mitigated the impact of Covid-19 after learning lessons from the initial wave, putting in place back-up suppliers, making greater use of technology to manage the supply chain and increasing stockpiles. The latter move has been adopted by 29% of respondents in a reversal of just-in-time approaches to manufacturing. BCI said these lessons learned from the pandemic must drive senior management commitment to boost supply chain resilience. “More organisations than ever report management commitment to supply chain risk at medium or high – 84%, up by four percentage points. In the history of this report, nearly all have said either medium or low, so this shows that management really is taking more of an interest,” Elliott concluded.

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