The high cost of supply chain glitches
Thursday, 31 May 2018
THE HIGH COST OF SUPPLY CHAIN GLITCHES
Supply chain disruptions are widely regarded as one of the greatest risks facing manufacturers, and have become a top concern of global insurance providers.
A glitch in its supply chain can cost an organisation up to 10% of its shareholder value, and even put the company out of business, warns international supply chain risk management specialist, Gregory Schlegel. A professor at Lehigh University in the USA, a renowned author and founder of the global Supply Chain Risk Management Consortium, Schlegel will be sharing his insights with Southern African supply chain professionals at the first ever Supply Chain Risk Management Summit, which takes place in Johannesburg, in February 2018.
“Never before has there been such exponential growth of supply chain complexity, uncertainty and risk as we are seeing today,” he stresses. “With globalisation expanding at a remarkable rate, supply chains have moved into areas where they have never operated. Research shows that if a business is not prepared, even a single small to medium supply chain disruption can cost it as much as R6 million. Most companies across the globe are experiencing an average of seven to 10 supply chain risk events a year – from port congestion to poor supplier performance and changing weather patterns. This equates to an annual cost of R60 million.”
Schlegel says that 25% of companies that experience a moderate to severe supply chain disruption go out of business around 18 months after the event. “It is a sobering thought, and not a statistic that we ever read about, because few companies or brands want to advertise the fact that they were ruined because they were not prepared,” he asserts.
The Supply Chain Risk Management Consortium that Schlegel founded comprises 20 leading multinational organisations that are collaborating to develop skills, solutions and methodologies to enable businesses to identify, assess, mitigate and manage enterprise risk. In addition to his experience as a supply chain executive for several Fortune 100 companies and supply chain executive consultant with IBM, Schlegel is the co-author of a definitive book on the subject, "Supply Chain Risk Management: An Emerging Discipline”.
The inaugural Supply Chain Risk Management Summit is being hosted by Bespoke, a leading African contracting, procurement and supply chain management advisory and training provider, in partnership with Southern African supply chain and operations management association SAPICS.
“Supply chains are becoming ever more complex, particularly with the increase in outsourcing and the advancement of multi-tiered global supply networks. More and more organisations are now faced with direct and continuously evolving operational and legislative risks as a result of market disruption or malpractice in their supply chains,” comments Bespoke CEO Andrew Hillman.
“I met Professor Gregory Schlegel at the 2017 SAPICS Conference, and was fortunate to attend one of his risk and resiliency workshops at the event. Greg’s deep understanding of supply chain risk and resiliency prompted Bespoke to invite him back to South Africa in early 2018 to deliver a risk management workshop to one of our clients in the financial sector and to lead a three-day public programme entitled ‘Pragmatic Approaches to Supply Chain Risk and Resiliency’.”
The latter evolved into the inaugural Supply Chain Risk Management Summit, jointly created by Bespoke and SAPICS. “We were already discussing opportunities for collaboration, and agreed to capitalise on Prof Schlegel’s visit and launch an exciting addition to the 2018 supply chain calendar. We hope that the summit will become an annual feature event,” Hillman expands.
Outlining the significance and benefits of Bespoke’s partnership with SAPICS, he says that it will bring leading practices in education, as well as knowledge development and networking opportunities, to SAPICS members and Bespoke clients across Southern Africa.