£200,000 a year is the average loss Britain’s mid-corporate businesses suffer from supply-chain disruption, yet some 55 per cent don’t take the necessary precautions to protect themselves from it.
88 per cent of mid-sized organisations in the UK have suffered through some significant losses through supply chain disruptions recently, revealed a report by Zurich Insurance. A number of catastrophes last year such as the Japanese tsunami and the Thai floods have hit businesses hard, leading to profound financial losses and reputational damage.
These losses, however, didn’t give UK businesses the incentive to prepare better for future supply chain disruption. Over half have failed to review their supply chain within the last six months. The reason: a lack of time and review processes that are too expensive.
This lack of preparation is surprising in the face of the London Olympics, which one third of mid-sized UK companies predict will cause greater disruptions but few are taking measures to mitigate the risk.
Nick Wildgoose, Global Head of Supply Chain at Zurich told Real Business that the vulnerability of the UK mid-market to supply chain disruption is particularly high. He hopes that the numbers revealed will be a wake-up call to businesses across the country.
Bigger companies tend do more to prepare, because they have more resources available. But they all have room for improvement in this area. I hope this report is another catalyst to increase the awareness that this is a real issue the board should be more concerned about.
Disruptions and financial impacts are visible across all sectors, although manufacturers, who generally have more complex supply chains, are taking the biggest hit at £228,608 on average over the past 12 months.
“Companies are generally becoming more and more dependent on supply chains, but some differences across sectors are not surprising,” said Mr Wildgoose. The lack of preparation and business continuity planning amongst businesses, particularly those who are highly dependent on suppliers, is alarming. Businesses need to map out their key suppliers and plan for the worst case scenario, or suffer significant disruptions and associated financial impacts.