Introduction
Supply chain disruption is a phenomenon that has become increasingly common in recent years. It occurs when any unexpected event disrupts the normal flow of goods and services within a business’s supply chain. This can lead to costly delays, decreased customer satisfaction, and lost revenue. To better understand how to prevent or mitigate future disruptions, it’s important to analyze the trends and causes of supply chain disruption.
Analyzing Trends in Supply Chain Disruption
Recent research from the Hackett Group found that nearly 60% of companies have experienced some type of supply chain disruption in the past year. The study also revealed that the most common causes of disruption are natural disasters, technology issues, trade wars and tariffs, cybersecurity breaches, and labor shortages.
Examining Causes of Supply Chain Disruption
To better understand the causes of supply chain disruption, let’s take a closer look at each one:
Natural Disasters
Natural disasters such as floods, hurricanes, earthquakes, and fires can cause significant supply chain disruptions. According to a 2017 survey by the Risk Management Association, 66% of companies reported experiencing a supply chain disruption due to a natural disaster in the past two years. In addition, 45% of those companies said that their disruption lasted more than three months.
Technology
Technology can be both a blessing and a curse for supply chains. While advances in technology have enabled companies to streamline their processes, they’ve also made them more vulnerable to disruption. For example, if a company’s IT system crashes or a new software update fails, it can disrupt the entire supply chain. According to the Hackett Group, 16% of companies reported experiencing a supply chain disruption due to technology issues in the past year.
Trade Wars and Tariffs
The ongoing trade war between the US and China has caused significant disruptions to global supply chains. According to the International Monetary Fund, the US-China trade war could reduce global GDP by 0.5%. Companies that rely on imports from China have been hit particularly hard, as tariffs on Chinese imports have increased costs and caused delays in shipments. In addition, retaliatory tariffs from other countries have created even more uncertainty for businesses.
Cybersecurity Breaches
Cybersecurity breaches can have a devastating effect on supply chains. Hackers can target a company’s IT systems and gain access to sensitive data, which can lead to costly losses and disruptions. In addition, cyberattacks can lead to downtime, which can further disrupt the supply chain. According to the Hackett Group, 15% of companies reported experiencing a supply chain disruption due to a cybersecurity breach in the past year.
Labor Shortages
Labor shortages can lead to supply chain disruptions, especially in industries that require large numbers of workers. For example, the construction industry is facing a shortage of skilled laborers in many parts of the world, leading to delays in projects and disruptions in the supply chain. According to the Bureau of Labor Statistics, there were 7.4 million job openings in the US in July 2020, the highest level ever recorded.
Conclusion
In conclusion, supply chain disruptions can be caused by a variety of factors, including natural disasters, technology issues, trade wars and tariffs, cybersecurity breaches, and labor shortages. Companies should take steps to protect themselves against these disruptions, such as investing in technology solutions and diversifying their supply chains. By taking proactive measures, companies can minimize the risk of supply chain disruptions and ensure their operations remain efficient and profitable.
Resources
Hackett Group. (2020). “Supply Chain Disruptions Are Common and Costly.” Retrieved from https://www.thehackettgroup.com/insights/supply-chain-disruptions-are-common-and-costly/
Risk Management Association. (2017). “Industry Survey: Natural Disaster Risk Management.” Retrieved from https://www.rmahq.org/data-and-research/industry-survey-natural-disaster-risk-management
International Monetary Fund. (2019). “The Impact of Trade Tensions on Global Growth.” Retrieved from https://www.imf.org/en/Publications/WP/Issues/2019/07/05/The-Impact-of-Trade-Tensions-on-Global-Growth-45942
Bureau of Labor Statistics. (2020). “Job Openings and Labor Turnover Summary.” Retrieved from https://www.bls.gov/news.release/jolts.nr0.htm
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