Globalization Increasing Risk Of Supply Chain Disruptions: Survey - InformationWeek
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10/2/2006
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Globalization Increasing Risk Of Supply Chain Disruptions: Survey

A majority of companies are buying more sophisticated supply chain technology and improving their forecasting and planning capabilities, according to the Accenture study.

Economic globalization is stretching supply chains very thin, and executives at U.S. companies say that's increasing the risk of supply chain disruptions and making it more difficult to recover when failures occur, according to the results of a survey conducted by the Accenture management consulting firm.

Many supply chain managers queried in the survey believe their supply chains are secure from possible disruptions. But that confidence is belied by the fact that nearly two-thirds plan risk-mitigation measures such as boosting spending for improved supply chain management technology, increasing logistics capacity, and developing more accurate forecasting and planning processes, according to the May survey of 151 supply chain executives at U.S. companies with more than $1 billion in revenue.

Accenture said the best game plan for mitigating supply chain risk is improving supply chain visibility and planning, as well as developing contingency plans in the event of supply chain disruptions.

Seventy-three percent of those surveyed experienced supply chain disruptions in the past five years. Of those, 94% said the disruption impacted profitability and affected their company's ability to meet customer expectations. About half of those described the impact as "moderate or significant," according to Accenture. Of those that had experienced supply chain failures, 36% said it took more than a month to recover, and 32% said recovery took between one week and one month.

Looking forward, 50% of the executives expect risks associated with raw-material supplies or parts to increase over the next three years, and 36% anticipate increased risk of service failures due to longer supply chains and lead times. And more than one-third of the executives expect increased supply risks associated with port operations and customs delays, geopolitical instability, and potential shortages of skilled workers.

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