Thursday 24th Aug 2017 - Logistics & Supply Chain

Two thirds of businesses hit by value chain disruption

Almost two thirds of businesses have experienced disruption to their value chains as a result of events beyond their control, according to an Oracle survey of large organisations in the EMEA region.

Over the past 12 months, 63 per cent of businesses across EMEA have reported that they have seen disruption to their value chain due to unpredictable events beyond their control, such as economic disruption (24 per cent), adverse weather (19 per cent) and bankruptcy of suppliers (16 per cent).

In the United Kingdom, this figure was higher than the EMEA average, at 70 per cent.

The report, “Managing the Value Chain in Turbulent Times”, surveyed 677 senior decision makers in large organisation across nine EMEA regions.

It found that among those businesses that experienced disruption, it took 63 days on average to get back to normal operations following an incident.

And the cost amounted to an average £450,000 per incident, including costs associated with lost sales, lost customers, product recall and the work involved in having to rebuild the value chain.

In the UK, the cost was below the regional average at £275,000 per incident.

Despite this level of disruption three quarters of organisation admitted that they have not performed a risk assessment on all elements of the chain, leaving them exposed to financial loss.

And 58 per cent of businesses which had not performed a comprehensive risk assessment had been affected by disruption.

The research, which was carried out on behalf of Oracle by Dynamic Markets, also found that compliance also presented a challenge to  large businesses in EMEA.

Some 79 per cent reported having to comply with at least one type of legislation and trade regulation that affected their value chain.

The research shows however, that a significant proportion of companies are struggling to comply with these regulations, with 30 per cent having failed to comply with at least one, which they are meant to adhere to during the last 12 months.

Some 82 per cent of senior decision makers said that departments or groups in their organisation are generally bad at keeping them informed. In addition, 85 per cent of senior decision makers stated that departments/groups of people within their organisation struggle to provide timely data and information relating to products and services.

And the study also revealed that a poor communications infrastructure may be to blame for many of these communications issues. 61 per cent of businesses reported that internal communication and collaboration suffers due to data and/or technology problems.

In addition, 21 per cent think they have incompatible technology and just over one in four (27 per cent) believe their organisation has inadequate IT systems in place to deal with this. A further 56 per cent said that data and/or technology problems hinder external collaboration and communication.

Dominic Regan, senior director, value chain execution at Oracle EMEA, said: “The survey paints a picture whereby a lack of communication and collaboration, when combined with poor risk assessments and inadequate compliance measures, is putting businesses at risk of significant operational disruption and financial loss.

“The good news for businesses is that this state of affairs can certainly be remedied. By ensuring that all supply chain applications can work together, businesses can share information quickly and cost effectively across the entire business in a way that is both resilient and adaptable. The value chain allows businesses to keep their promises to their customers. It is a highly important asset and, as such, should be adequately managed and protected,” said Regan.

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