The frequency of supply shocks has increased 33% since 2022, with the average organization suffering $82 million in annual losses due to four “significant” disruptions., according to a survey released on August 10 by Interos.
The report, “Invisible Threats: Resilience 2023” surveyed 750 supply chain leaders spanning financial services, aerospace and defense, energy, and other global industries. The report was conducted with market research firm Vanson Bourne. It identifies a new threshold for opportunity in the post-pandemic era, with leaders affirming that better prevention and a faster response to continued disruptions could save their organizations an average of $37M annually.
The report notes 90% of organizations are unaware of sub-tier supplier disruptions until 48 hours after their occurrence, leaving enterprises ill-prepared to mitigate damage and loss affecting their brand, reputation, and profitability.
The data shows enterprises face numerous new and emerging supply challenges – including climate change, geopolitical turmoil, rising sanctions and controls, inflation, and financial instability. Over the last 12 months, most organizations have encountered multiple significant disruptions that required considerable mitigation efforts.
- The average organization assesses just 56% of its critical suppliers for vulnerabilities, creating weaknesses and blind spots across the rest of its supply base.
- 74% of procurement leaders agree that they cannot comply with emerging supply chain/third-party regulations without supporting data, analytics, and risk management software.
- The average annual cost of individual supply chain disruption categories was similar, ranging from $43M to $47M – illustrating the importance of continuous sub-tier mapping and monitoring across multiple risk variables; restrictions-related risks trigger the costliest disruptions.
Achieving supplier resilience has emerged as an essential competitive differentiator – yet a majority of organizations still lack the knowledge, resources, processes, and tools necessary to effectively manage hidden supplier or third-party risks.
“Only 5% of today’s Chief Procurement Officers believe they have the ability to continuously pre-empt risk and build resilience in their companies,” said Interos Founder and CEO, Jennifer Bisceglie, in a statement.“In today’s turbulent landscape, merely having superior products and solutions falls short. Embracing supply chain resilience is the key to safeguarding revenue, reputation, and ensuring regulatory compliance. Unmanaged risks can be turned into competitive advantage when enterprises adopt a ‘resilience by design’ strategy to take control of risk to satisfy customers and drive growth.”
The results of Interos’ survey highlight the continued and urgent need for organizations to redefine resilience and seize momentum. One survey participant admitted, “We assumed everything would work flawlessly, and now we know it doesn’t.”