BCI launches Supply Chain Resilience Report 2023

The level of supply chain disruption reported by organisations is still more than twice as high as pre-pandemic levels. Almost half of respondents (45.7% of them, in fact) experienced these issues with their closest suppliers at Tier 1, while 24.1% saw more disruptions at Tier 2. These figures are higher across the board than those listed in the pages of the 2021 report. However, the report notes that these high results are partly due to more analysis being undertaken on the performance analytics of supply chains.

With regards to these disruptions, respondents are equally split between those who witnessed the pandemic exerting a limited effect on their supply chain (44.1%) and those who experienced either major (33.8%) or otherwise serious (10.3%) knock-on effects. However, a positive finding is that most organisations have now mitigated the effects of the pandemic on their supply chains. Indeed, if further action is taken, one legacy of the COVID-19 outbreak may well be an increased focus on resilient supply chains.

The 2023 report finds that the initial flurry of activity to increase supply chain resilience following the pandemic is starting to diminish, but supply chains are still in a significantly better place than they were pre-COVID. That said, it’s critical that commitment to supply chain resilience remains a key part of resilience strategies going forward. Practitioners will need to continue to showcase the importance of this to those at senior management level such that lessons learned can be applied to new challenges in the near future.

This point is increasingly important, in fact, since only a third of respondents rated their top management’s commitment to supply chain resilience as ‘high’, meaning that unless this commitment is reignited, the opportunity to learn lessons from the pandemic could soon begin to fade.

Current and upcoming challenges

According to the survey respondents, cyber attacks and data breaches are the foremost threat posed to supply chains over the 12 months and will be so for the next five years. This finding emerges despite cyber attacks being sixth on the list of supply chain disruptions for the last 12 months.

The cause of the most disruption for the past year was, in fact, due to a lack of talent or staff shortages, with 46.8% of respondents affected, but only 39.7% of organisations expect this to be a concern over the next five years.

The report shows that some re-occurring threats, such as staff shortages, are still having a widespread impact on supply chains. They should, therefore, be given the appropriate weight in an organisation’s future analysis of the threat landscape in order for businesses to form an accurate picture of what lies ahead.

On the other hand, it’s reassuring to find that organisations are indeed thinking about and planning for longer-term threats and trends. As such, over the next five years, organisations have placed energy shortages (41.3%), natural disasters (44.4%) and adverse weather events (46.0%) among the Top Five risks posed for supply chains.

The number of organisations using a centralised approach to reporting supply chain disruptions has reached its highest level in the history of the report (at 35.6%). In total, 73.4% of organisations now report on supply chain disruptions.

On average, only 57.0% of key suppliers have business continuity arrangements in place. As a result, in the case of a supply chain disruption, there’s nearly a 50% chance that a supplier will not have any mitigation measures in place.

Those respondents who have not checked or validated their supplier’s continuity plans increased to 49.6% against 43.4% in last year’s report. However, this is still an improvement on pre-pandemic figures, while those organisations conducting more extensive checks (such as jointly exercising plans) have also increased over the three years.

Elevated levels of reporting

Rachael Elliott, head of thought leadership at the BCI, explained: “During the pandemic, we were buoyed by a significant uptake in the amount of attention supply chain resilience was earning from senior management. This helped to fashion a number of positive changes being adopted into supply chain strategies, such as more reporting, added attention to supplier due diligence and further investment in technology to help manage supplier resilience.”

Elliott continued: “While this attention has become more muted as the problems associated with COVID-19 start to wane, it’s encouraging to see that organisations remain convinced of the importance of elevated levels of reporting, introducing supplier due diligence at an early stage in contract negotiations and rethinking the threat landscape when considering potential future impacts on supply chains. Good progress indeed, but we, as resilience professionals, need to continue to work hard on promoting the importance of supplier resilience to senior management in order to retain their ongoing support.”

Jeff McDonald, executive vice-president at SGS, noted: “As the world picks up the pieces following the pandemic and looks to confront a global recession, businesses need a beacon of certainty and the knowledge to build resilience. By cleverly combining detailed data and in-person interviews, the BCI’s report brings the latest supply chain resilience information to the forefront. It also brilliantly combines lessons from the past with present and future potential issues to afford a rounded picture.”

McDonald added: “Although the future looks bright for business continuity, as many businesses continue to pursue the practice to ensure their prosperity and future, we simply cannot overlook the fact that managing supply chains is not a one-time activity. Rather, it’s something to be approached persistently and consistently. Organisations must understand the current landscape, create a plan, implement Best Practice and be ready to take action that will mitigate the risks.”

*Download copies of the BCI’s Supply Chain Resilience Report 2023 in full online