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PSO: Supply Chain Risks and Impacts

March 2, 2016 Published by

The supply chain is the lifeblood of a business – without it, there are no products, and no customers. Yet, most companies don’t take steps to identify or mitigate risks to their supply chains. In fact, a study published in Risk and Insurance magazine found that just 25% of a typical company’s supply chain is assessed in any way for risks like quality and safety challenges, supply shortages, legal issues, security problems, regulatory compliance, and environmental hazards.
According to UPS, about 52 shipping containers are lost or damaged at sea every week. Also, cargo moving by truck accounts for 43% of supply chain incidents, with the most likely causes of damage including theft, rough handling, and environmental conditions. [more] The Global Supply Chain Institute claims that large companies that experience a major supply chain disruption can expect problematic fallout, including:

  • Decrease in sales of 93%
  • Reduction in shareholder returns of 33%-40% over a three-year period
  • Share price volatility increase of 13.5%
  • Decline of 107% in operating income and 114% in return on assets

Without insurance, those losses can be hard to handle if they happen to you. Consider partnering with a specialist to help map your supply chain to identify risks and establish processes and procedures to address them – allowing you to protect your products, and ultimately, your lifeblood.