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New Survey Data Reflecting on Causes of Major Supply Chain Disruption

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Supply Chain Matters named sponsor E2open, commissioned a recent research report focused on supply chain disruption, and the study results present important supply chain related insights for many industry supply chains.

Between February and September 2012, Gatepoint Research contacted over 200 supply chain executives, the vast majority of which had responsibilities of Director level and above, with 29 percent at Vice President or CxO level. Respondents for the most part residing in firms with revenues in excess of $1 billion. According to study authors, all the respondents participated voluntarily and none were engaged using telemarketing. Thus this study is a good representation of senior level perceptions and priorities concerning the managing of supply chain disruption.

Responses to the following questions merit discussion.  One question probed on current sources of supply chain disruption:

Question: From what sources have you encountered supply chain disruption?

 

 

 

 

 

 

 

Notice that the first two responses, responding to unplanned demand and supplier failure, take precedence over natural disaster.  This author just delivered a webinar to an internationally based audience on the topic of Supply Chain Control Tower capabilities.  In the webinar, I conducted an online, real-time interactive polling with a similar type of question. Listeners also ranked “unplanned demand” and “supplier failure” also as the highest category of current disruption.

In essence, supply chain executives and their respective teams are communicating that despite their best efforts at forecasting, planning or sensing customer product demand, unplanned demand remains as a challenge for coordinated and timely response. That is significant because it represents last-minute added business opportunities that supply chains are struggling to fulfill. Customers are indeed more demanding, and expect their suppliers to have adequate supply chain response management capabilities to fulfill last-minute needs. Similarly, despite the best efforts directed at monitoring suppliers, important information related to operational and financial conditions are apparently not being shared or a sugar-coated.

Another reinforcing question provides added insight:

Where in your supply chain do most disruptions occur?

 

 

 

 

 

 

Notice that the responses indicate that disruptions occur just about equally among both the product demand and tier one supply quadrants of the supply chain.

Another set of questions probed on both awareness of a supply chain disruption and perceived actual response to the disruption.  Nearly 34 percent of responders indicate that they were not aware of the disruption until more than a day after occurrence.  A follow-on question probed on the actual perceived response time.

(After awareness of the supply chain disruption) How quickly can you respond to most supply chain disruptions?

 

 

 

 

 

 

Over half of the respondents, 53 percent, respond to a disruption either within, or longer than a week. That is a telling indicator for the need for improved sense and response capabilities.

When asked to prioritize needed improvements to address disruption over the next 12 months, a good indicator of highest priorities, the responses indicated a generally equal balancing among capabilities for increased visibility into tier one supplier inventories (38 percent), deeper partner connectivity and collaboration tools (30 percent and 36 percent respectively), along with the ability to invest in what-if scenario tools (30 percent).

Our readers can perhaps reflect on the results of this survey to their current challenges and priorities in managing supply chain disruption, as well as in future investments in needed capabilities.

Bottom-line, supply chain disruption remains a key executive level concern, and disruption takes on many dimensions, including lost business and industry competitive dimensions.

Readers who desire to view a copy of this mentioned report can do so by clicking on the following web link.

Bob Ferrari

Disclosure: E2open is one of other named sponsors of the Supply Chain Matters Blog. The subject report, Strategies for Managing Supply Chain Disruption is copyright 2012, Gatepoint Research.  All rights reserved.

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