How Severely Do Disruptions Affect the Bottom Line?

Unless a parade of circus clowns suddenly comes marching through the room, there is no such thing as a happy disruption in business. An article from Environmental Leader cites a report from the MIT Forum and PricewaterhouseCoopers to discuss just how bad disruptions are for business. The report surveyed 209 global companies, and among other numbers, 95 percent of them felt dependencies between supply chain entities have increased, and 94 percent found that new products are introduced more frequently. In spite of that, only 40 percent of those polled invest in advanced risk mitigating processes. These findings illuminate five key principles identified by PwC, as taken from the original article below:

  1. Supply chain disruptions have significant impact on company business and financial performance.
  2. Companies with mature supply chain and risk management capabilities are more resilient to supply chain disruptions. They are impacted less and they recover faster than companies with immature capabilities.
  3. Mature companies that invest in supply chain flexibility are more resilient to disruptions than mature companies that don’t.
  4. Mature companies investing in risk segmentation are more resilient to disruptions than mature companies that do not invest in risk segmentation.
  5. Companies with mature capabilities in supply chain and risk management do better along all surveyed dimensions of operational and financial performance than immature companies.

The time for maturation is now. Stop the bleeding from disruptions by thinking more intelligently about risks beforehand. Start by buying a new lock for the door; no matter how happy they are, circus clowns should not be able to just waltz right into the place.

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