UK businesses suffer supply chain breakdown

May 30 2002 by Brian Amble Print This Article

Over a quarter of UK organisations have suffered major disruptions to their business, due to a breakdown in their supplies and services, over the past five years, according to a research report published by the Chartered Management Institute.

Businesses have been hampered by a vast array of problems, ranging from a fire on a container ship to a foreign border closure. The fuel blockade of autumn, 2000, the foot-and-mouth crisis and the terrorist attacks of September 11 also loom large among the reasons for dislocation of the supply chain.

The findings are contained in a survey of Business Continuity and Supply Chain Management, conducted by the Chartered Management Institute in collaboration with the Business Continuity Institute. The research is published to coincide with the British Continuity Awards, being announced today, 30 May.

Other causes of a breakdown in the system include industrial action at home and abroad, major plant failure, late deliveries, IT problems and suppliers going bankrupt. Organisations have also suffered disruption from such surprise causes as a shortage of LGV driving tests and a scarcity of replacement printer cartridges.

When it comes to protecting themselves against supply chain failure, 88 per cent of managers admit that their organisations do not require their suppliers to have business continuity plans. However, 35 per cent say they impose delivery obligations as part of a supply contract.

Organisations overwhelmingly recognise communication as vital to reducing the damage caused by a sudden crisis, with 48 per cent saying this is the key to improving continuity in their supply chain. Forty per cent believe that encouraging the supply network to share information on risk exposures would have a positive effect.

Mary Chapman, Chief Executive of the Chartered Management Institute, said: "These findings illustrate how organisations can sometimes be knocked off balance by the most unlikely of causes. While it is impossible to plan for everything, it is vital that organisations become more aware of the need to have a business continuity plan in place to manage the effects of disruption, and to protect themselves against supply chain failure.”

John Sharp, Chief Executive of the Business Continuity Institute, said: "There is clear evidence to show that effective continuity management is not being practised within supply networks. The movement to ‘Just in time’ supply is leaving organisations vulnerable to any disruption. Enlightened businesses will work with their suppliers to introduce continuity management in the same way that they have promoted quality management. Business Continuity Management is a key tool to ensure continuity of supply to the customer and provides competitive advantage to those seeking new business.”

Business Continuity Management provides protection, as well as recovery from failure. Individuals who observe costly weaknesses and vulnerabilities in organisations, and take active steps to mitigate them, are the unsung heroes of Business Continuity. For those individuals, Corporate Insurance & Risk magazine, in association with The Business Continuity Institute, has decided to honour their achievements by creating the International Business Continuity Awards.

The short-list of candidates includes someone from a major high street retailer, who already works with suppliers to promote BCM, and an organisation which had to cope with the supply chain disruptions caused by the foot & mouth outbreak of last year. This year’s awards, sponsored by the Corporation of London, will be made at a gala dinner at the Hotel Inter-Continental, Hyde Park London on 30 May.

The research was conducted among 5,000 managers of whom 674 responded - a response rate of 13.5 per cent.

For further information contact Karen Dale or Michelle Low, on: 020 7497 0496, or outside office hours on: 020 8540 9815
Email: [email protected]

The Chartered Management Institute came into being on 1 April 2002, as a result of the Institute of Management being granted a Royal Charter. It shapes and supports the managers of tomorrow, helping them deliver results in a dynamic world. The Institute helps set and raise standards in management, encouraging development to improve performance.

The Business Continuity Institute (BCI) was established in 1994 to provide opportunities to obtain guidance and support from fellow professionals. The Institute provides an internationally recognised status in relation to the individual's experience as a business continuity practitioner.