Weather is the leading culprit for supply chain disruptions

Having a supply chain disruption? More than likely, the blame can be assigned to adverse weather events, such as a tornado, flood, or windstorm, according to the results of a new survey of supply chain organizations worldwide.

A survey conducted by the Zurich Financial Services Group and the UK-based Business Continuity Institute found that the most common reason for a supply chain disruption in 2011 was bad weather, cited by 51 percent of respondents. The two groups canvassed 559 companies from 14 different industries and 62 countries.

The survey found that 85 percent of respondents had suffered at least one supply chain break in 2011. Unplanned telecommunications and information technology outages were the second most-common reason for a disruption, cited by 41 percent of survey takers. There was a tie for third, with 21 percent listing transport-network disruption and an equal percentage citing an earthquake and/or tsunami. Most of those (20 percent) were affected by the March 11 earthquake and tsunami in Japan.

The consequences of a supply chain break can be severe for an organization, the survey results suggested. When asked what impact such a disruption could have on affected companies, 49 percent of respondents said that it can result in a loss of productivity, and another 38 percent said it could increase operating costs. Thirty-two percent said disruptions cause a loss in revenue—so much so, in fact, that 17 percent of the respondents said the financial costs of the largest single supply chain incident they experienced this past year amounted to 1 million euros or more.

Finally, the survey also found that most organizations are not prepared to handle a severe disruption. Only 8 percent of the respondents were confident that their suppliers had a business continuity program in place to respond specifically to supply chain ruptures.