Supply chain now recognised as 'strategic issue'

Supply chain risk is fast gaining traction as a strategic issue according to the majority of the 600 business executives from around the world interviewed by Deloitte Consulting in a recent survey. “There are now more risks to the supply chain and risk events are becoming more costly. As a result, 71% of executives said that supply chain risk was important in strategic decision making at their companies,” according to authors Kelly Marchese and Siva Paramasivam. Disruptions are not only more frequent, they are also having a larger impact. Fifty three percent of executives said that these events had become more costly over the past three years. Studies have found that natural disasters are occurring more frequently, and the economic impact of each event is usually greater than before. For example, five of the 10 most expensive natural disasters have taken place just within the past four years, according to the authors. The most common and the most costly outcomes of supply chain disruptions are erosion of margins and an inability to keep up with sudden changes in demand, which illustrates the extent to which the supply chain risk issue affects the “heart of the business”.