How Supply Chain Disruptions are affecting US companies
Hits to the bottom line and brand image
We wanted to look at how Supply Chain Disruptions are affecting US companies and found the following information.
Supply chain disruptions in 2020 had a real impact on the bottom line, as companies lost trillions of dollars in revenue, according to the report, with 64% of respondents reporting revenue losses between 6% and 20%.
The survey also indicated that the disruptions caused a big hit on brand reputation, with 38% of respondents reporting that their brands had been impacted. Many respondents said that their struggles to maintain supplies of goods and services left customers frustrated.
For example, exercise equipment and services firm Peloton suffered customer unrest when it could not ship exercise machines just as demand spiked during the pandemic, Piatek said.
“The Cost of Supply Chain Disruption” included a survey of 400 directors and C-level executives from five industries — agriculture and food, consumer goods and retail, energy and utilities, healthcare and pharmaceuticals, and industries such as automotive, machinery, and telecoms. Half of the survey respondents self-identified as working in supply chain and procurement, and half in strategy, finance
“Peloton is a great example of a firm that understood the problem far too late because, by the time they realized how damaging it was for their brand, it limited the number of options they had to rectify it,” he said. “The problem was, in the early days of the pandemic, they saw the change in consumer demand, but they had not historically invested in a production and supply chain model that gave them the appropriate level of redundancy and flexibility to ramp up that production as they needed.”
How Supply Chain Disruptions are affecting US companies
Companies are recognizing the seriousness of supply chain disruptions and are beginning to implement technology and strategies to address the issues, according to the report.
A majority of respondents, 61%, indicated that redundancy and resiliency are more important in the supply chain than speed and efficiency. Just over half said that their companies need to make significant changes in the next five years to manage supply chain disruptions. Measures include getting more supply chain visibility and reducing the reliance on suppliers from any one country but particularly from China.
While China will likely remain a large manufacturing base, the report said, a 100% China-centric supply chain going forward is unlikely. In fact, many companies are now moving manufacturing operations from China to India, Mexico, the US, Canada, Vietnam, and other Southeast Asian countries. Brecher Manufacturing does manufacturing in most of these countries and does Global Strategic Sourcing for those we don’t.
This represents a “huge shift” in a company’s supply chain strategy, Piatek said and has been spurred by the Biden Administration’s executive order on supply chain resiliency. Companies are beginning to consider the possibilities of reshoring or bringing suppliers and manufacturing operations for critical industries closer to home.
“This doesn’t mean that they have to rip out everything they’ve built in the past, and it doesn’t mean China’s going anywhere,” he said. “But we’ll see more ‘China plus one’ models, where you have a low-cost production location of choice blended with more manufacturing and supply chain assets closer to end consumption, allowing the firm to have more resiliency and redundancy in its approach.”
If you are planning to build duplicity in your supply chain to avoid or mitigate any shortages risk, send us an email or call us to see what Supply Chain Solution suits you better.
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Article extracted from Techtarget
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