The past few years have highlighted serious deficiencies in prevalent supply chain strategies and the major risk that disruptions pose to corporate success. Loss of sales and market share are the most visible and measurable impacts. McKinsey estimates that shocks lasting a month or longer are occurring every 3.7 years and companies can expect to lose 42% of one year’s EBITDA every decade due to supply chain disruptions.
Herculean efforts by Procurement and Supply Chain departments to keep supplies flowing have prevented even more extreme disruptions than what we’ve experienced, but have inadvertently created additional risks.
Under pressure to quickly identify new sources of supply, due diligence has–at times been reduced, thereby increasing the likelihood of quality issues, unknowingly supporting forced labor, or exposing organizations to fraud. In these instances, tradeoffs have been made, such as impeding carbon emissions reduction progress through the use of less sustainable products or carbon intensive transportation options.
Supply chain disruptions, and the reactions to them, do more than simply reduce profits today. They can damage your brand reputation, reduce customer satisfaction, create compliance breaches and curtail overall corporate efforts to improve our world.
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