Amid a series of supply chain shocks to the global economy - including COVID, SolarWinds, the Suez Canal debacle and more - a new international survey, the Interos Annual Global Supply Chain Report, reveals that global supply chain disruptions cost large companies, on average, $184 million a year.
Nearly all (94 percent) of the surveyed 900 senior IT, IT security and procurement decision-makers from companies across the US and EU reported some negative impact to revenue resulting from supply chain disruption, which they attributed to a variety of supply chain risks including cyber breaches, financial risks, and ESG (environment, social, governance) transparency issues.
The study, conducted by market-research firm Vanson Bourne on behalf of Interos, also showed that supply chain shocks aren’t just impacting revenue; they’re damaging public perception, with 83 percent reporting that their respective firms have suffered reputational damage as a result of supply chain disruption.
“Our survey results underscore the growing importance of supply chain operational resilience in the globally interconnected world that we all live and operate in,” said Jennifer Bisceglie, CEO of Interos. “We can no longer cleanly separate digital and physical supply chains, which is driving a need for greater transparency into hidden supply chain risks, relationships and reliances, which companies are recognizing as critically important to protecting both the bottom line and corporate reputation.”
“The recent White House Executive Orders on supply chain integrity and cyber security point to the fact that the fragile extended supply chain has become the soft underbelly of the global economy — and we see the private sector both here in the States and in Europe starting to think more intensely about how best to respond to such growing challenges and vulnerabilities,” Bisceglie added.
Trade disputes, cyber attacks, and COVID continue to disrupt
In addition to suffering monetary and reputational damages, global supply chain leaders continue to contend with disruption from COVID and have a high level of concern over the future impact of brewing international trade conflicts. A little over half (51 percent) of organizations’ global supply chains have been impacted by the COVID-19 pandemic in the last two years with almost all (89 percent) of those affected reporting disruptions to product lines and locations.
In the wake of recent ransomware attacks including the Colonial Pipeline and JBS hacks, it should come as no surprise that three-quarters (77 percent) of those surveyed encountered at least one cyber attack on their supply chain in the last year.
An overwhelming majority (88 percent) also reported that international trade disputes would cause significant, notable, or moderate impacts to their organization with the most commonly faced impacts being forced changes in production locations, disruption to banking/payment infrastructure, and increases in cyber espionage against their business, among others.
Visibility is more important than ever
The status quo – manual, survey-driven processes that provide periodic visibility over a portion of the supply chain – is rapidly shifting. As supply chain driven cyber attacks and a host of other factors increase volatility, corporate leaders are recognizing that the supply chain security and resilience must be a core business priority.
In fact, half of those surveyed (50 percent) believe that it will be their organization’s top business priority in two years’ time, compared to just under two-fifths currently (39 percent). This shift is reflected in the increasing frequency that boards are meeting to discuss supply chain risk, with over three-quarters (78 percent) reporting that their boards confer on this topic at least once every month.
But change may not be happening fast enough, even after the COVID shock to the global system.
While many organizations are making supply chain risk and operational resilience key business priorities, full implementation of new, rapid risk mitigation technologies - such as AI/data and analytics - lags. Only a third (34 percent) of organizations currently assess their global supply chain on a continuous basis, in spite of the fact that these tools were considered more beneficial than any other kind of solution with 45 percent of leaders ranking them the top three most-beneficial tools for monitoring their global supply chain. The smallest portion of users (16 percent) ranked questionnaires as the most helpful.