APICS is the premier professional association for supply chain management.

Majority of Businesses Experienced Supply Chain Failure

by APICS Staff | N/A 2011 | 11 | 23

A survey conducted by the Business Continuity Institute and sponsored by Zurich Financial Services reveals that 85 percent of companies reported at least one supply chain disruption in the last 12 months. Companies across 62 countries participated in the survey.

The findings also included the following data:

  • Earthquakes and related disasters in Japan and New Zealand affected 20 percent of responding companies.
  • When asked about the sources of disruption, 51 percent of respondents cited adverse weather and 41 percent reported information technology and telecommunications outages.
  • Cyber attacks rose in the financial services sector.
  • Nearly half of responding companies lost productivity due to supply chain disruptions.
  • About three-quarters of companies said that Just-in-Time and lean strategies made them more vulnerable to supply chain disruption.

The survey demonstrates that it is critical to strike a balance between lowering costs and exposing the business to unacceptable risks, says Lyndon Bird, technical director at the Business Continuity Institute. The survey report says that effective management of supply chain continuity is crucial not just because of the immediate costs of disruption, but also the long-term consequences to stakeholder confidence and reputation following a supply chain failure.

Supply Issues Hinder Latest iPhone

Supply shortages caused Apple's iPhone 4S to become only the second-best-selling mobile phone in the United Kingdom, reports the UK Press Association. Rival Samsung's Galaxy S II smartphone outsold all other devices, which independent price comparison website uSwitch.com says is due to Apple's supply problems.

"The iPhone 4S has generated a huge level of interest from consumers, and retailers have found it tough to cope with the high demand," says technology expert Ernest Doku of uSwitch.com. The situation is exacerbated because the iPhone 4S is competitively priced, leading to heavier demand, he says.

Meanwhile, CNN Money reports that supplies of iPhones will be constrained in the near future. According to analyst Ashok Kumar at investment banking firm Rodman & Renshaw, shortage of an unidentified "key component" is likely to limit production of the iPhone 4S. And Jeff Fidacaro of investment firm Susquehanna notes that "supply constraints" will similarly result in fewer phones produced this year.

Infrastructure Slows Online Retail Growth in Russia

The growth of online shopping in Russia is hampered by slow delivery and weak infrastructure, reports Reuters. According to accounting group PricewaterhouseCoopers (PwC), retailers there will have to make bigger investments before they can capitalize on increasing internet use in Russia, which recently surpassed Germany as the biggest internet market in Europe.

A PwC survey of online users in Russia found that 92 percent use the internet for shopping at least occasionally, but only 12 percent shop online at least once a week compared to 28 percent in Britain. "If we compare the pace of Internet penetration in the Russian provinces with that of online retail, we will see a very significant lag, and logistics is one of the main reasons," says Vardan Gasparyan, senior manager and supply chain specialist at PwC Russia.

Rail is the most common means of transporting goods in Russia. Therefore, consumers often have to wait longer before orders are received, making online shopping less attractive than visiting a mall. Retailers cite a lack of modern infrastructure as a major constraint to expansion in Russia's provinces, where rising disposable incomes signify the potential for rapid sales growth. Traditional retailers have the advantage of physical presence in the provinces, but purely online retailers will have to spend on infrastructure to catch up, says Vardanyan. 

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