November 12th, 2013

Causes of Supply Chain Disruption

Posted at 1:00 AM ET

The Business Continuity Institute’s 2012 Supply Chain Resilience Survey estimates that outsource service provider failure represents one of the most significant causes of supply chain disruption, only lagging behind adverse weather and technology (see Figure F-1). The particular danger represented by the supplier or service provider, especially if it involves an aspect of critical infrastructure, is that the failure is likely to cut across multiple industries and geographies. For example, the disruption caused by a component part of technology used by a power generator does not just shut the utility down - all commercial and residential operations grind to halt.

f1-supply-chain-impact-olfinal

While recent natural disasters such as floods in Asia and Europe, tornadoes in the U.S. Midwest and Superstorm Sandy on the U.S. East Coast emphasize how devastating and disruptive Mother Nature can be, technology failures outpace adverse weather as the major force disrupting corporate supply chains. In addition, cyber attacks now outstrip fire and social unrest. If the failure of service provider is added into the mix of technology and cyber risks,these make up the majority of all supply chain disruptions.

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