The Business Continuity Institute (BCI), in partnership with Everstream Analytics, has released the 2021 Supply Chain Resilience Report. A crucial piece of research for the business continuity industry, which looks at the current status of supply chains across the globe and how they have been impacted by the events of the last 12 months.
In this 2021 edition, the report shows that more organizations than ever are now using technology to assist with supply chain management and mapping. 55.6% are now using technology to help analyse and report on supply chain disruptions, with the number using technology to help with supply chain mapping seeing a major increase to 40.5% (2019: 22.6%). The uptake of technology was primarily due to COVID-19; 57.6% of organizations admitted that the pandemic has been the main reason for investment in new technology and tools.
The number of supply chain disruptions organizations encountered in 2020 was higher than any other year in the report’s history. 27.8% of organizations reported more than 20 supply chain disruptions during 2020, up from just 4.8% reporting the same number in 2019. Organizations blamed COVID-19 for the dramatic increase in the volume of disruptions, although European respondents also reported disruptions due to Brexit-related issues.
COVID-related disruptions were more likely to occur beyond tier 1. The importance of knowing your suppliers’ suppliers was emphasised this year. Respondents reported that 40.2% of COVID-related disruptions were due to disruptions in tier 2 and beyond. Although this year’s report shows that, in addition to supply chain mapping, organizations’ due diligence beyond tier 1 is improving, COVID-19 has served as a tool to uncover where the gaps in processes lie.
Solving the logistics puzzle is set to continue to be a challenge into. COVID-19 affected all methods of transportation. At the start of the pandemic, air freight providers repurposed passenger planes to make up for the lack of belly cargo availability; land transport faced issues with goods being held up at borders; and sea freight is now struggling with global container shortages.
Senior management are now more engaged with supply chain issues. 82.7% of respondents report management commitment to supply chain risk is now “medium” or “high”- up nearly 10% compared to 2019. As balance sheets took a hit in 2020, the board’s interest in supply chain issues has increased With Governments now also clamping down on issues such as modern slavery within supply chains, BC professionals are confident that this elevated level of interest can – and should – remain.
Organizations are now more likely to interrogate the BC arrangements of critical suppliers. 75.2% of organizations report checking that key suppliers have BC arrangements in place – two-thirds more than in 2019. Interestingly, most professionals admitted this was not due to COVID-19, rather ongoing reviews of how suppliers should be managed. A further positive finding this year is that most organizations are now going beyond a “tick box” exercise when carrying out their due diligence processes. More than half now request full details of BC programmes rather than merely asking if a plan is in place.
More due diligence should be carried out pre-contract. The report shows that only 1 in 6 organizations carry out due diligence on all key suppliers at the procurement stage; and a quarter fail to do the necessary due diligence on key suppliers’ BC programmes until after contracts have been signed. Ensuring BC arrangements are checked pre-contract is vital to ensuring suppliers can continue to meet contractual requirements during periods of disruption.
Download the BCI Supply Chain Report 2021 for more findings.