Executive research on Supply Chain resilience: how companies are addressing persistent disruptions

Some 100 European Supply Chain executives participated in Moore’s survey on how ongoing Supply Chain disruptions are affecting them. The respondents represent every aspect of the Supply Chain world: procurement, planning, production, quality, warehousing, and transportation. Most industries are also represented, with Supply Chain executives from pharma, automotive, FMCG, chemicals, metals, electronics, food, and agribusiness, among others.

The results confirm what everyone already knew: the impact of the many disruptive events and the changing dynamics of the global economy on Supply Chain and operations is enormous. No wonder many Supply Chain leaders have begun to adjust their approaches to sourcing, production, and distribution. In this article, we’ll look at the most significant findings from the study. If you’d like to read more, we’ve compiled the results in a white paper, which you can request at the bottom of this article.

Transportation costs and capacity continue to cause headaches

Over the past 30 months, transportation costs have risen dramatically worldwide. Pandemic shockwaves are still causing accordion delays and high transportation costs. For example, the average shipping cost for a TEU sea container is still five to six times higher than before the pandemic. Air freight and road transport costs also remain significantly more expensive than before. This is reflected in our survey numbers. As many as 92% of the Supply Chain executives surveyed indicated that they have been significantly to very strongly affected by increased transportation costs over the past 12 months.

It’s not just the increased costs that are impacting logistics. The capacity shortage in the transport sector is also leading to major delays and uncertainties. The visible consequences are long waiting times at seaports, container shortages, insufficient air cargo capacity, and staff shortages in road transport. The accumulated backlogs are still being clearly felt. No less than 90% of our respondents said they had been (or still are) affected by capacity issues. A surprising 60% of Supply Chain executives indicated that this has led them to adjust their logistics network and transport mode.

Geopolitical developments drive uncertainties

We shouldn’t forget that the geopolitical situation also has an immense influence on global Supply Chains. Just think of the disrupted trade relations between the West and China, the logistical and economic consequences of Brexit, and the conflict between Ukraine and Russia.

More than 93% of the Supply Chain executives surveyed indicated that the current geopolitical tensions are affecting their logistics flows. For 63%, these uncertainties were the reason for adjusting their logistics network. Thus, logistics activities were relocated, consideration was given to fundamentally changing the network, and some are even closing certain trade channels, temporarily or permanently.

Cyber risks: an underlying problem in the logistical landscape?

Reports about companies falling victim to cybercrime are appearing more and more frequently in the media. Cybercriminals can hold IT infrastructure and related operations hostage or even bring them to a standstill. However, our survey showed that only a minority had dealt with this issue directly or indirectly (e.g. via a supplier or logistics partner).

Although the current threat doesn’t appear to be that great, companies are certainly worried about it. While ‘only’ 7% reported that their operations in the last two years were seriously affected by security issues and hacking (of their own systems or of business partners’), many companies are still taking measures to protect themselves. Prevention is better than cure, in other words.

Nature does not (yet) cause landslides in Supply Chains

We also see more and more natural disasters in the news, such as forest fires, floods, volcanic eruptions, storms, and other extreme weather conditions. Yet only a minority of those surveyed indicated that these disasters had affected their logistics processes in the past two years.

Even the increased ambitions in the area of sustainability haven’t caused a sudden change of course for 65% of respondents. Many believe that you can gradually work toward complying with the announced greener regulations. So it’s not regarded as a sudden disruptive factor. That said, Supply Chain executives are aware that the impact of specific natural disasters can have significant consequences at the individual company level.

Extra stock and multi sourcing as a buffer against shocks

The vast majority of Supply Chain executives surveyed have built in additional safety measures on the supply side over the past year. The most frequently chosen techniques are a strategic increase in inventory levels (92%) and a targeted diversification in supplier base (87%). The figures also confirm that the focus of sourcing strategies is shifting toward risk management. Logically, this leads to the use of multiple suppliers more often. A focus on stability is clearly gaining ground.

Reshoring gradually set in motion

The longer a Supply Chain is, the more sensitive it becomes to disruptions. By organizing purchasing, production, and distribution closer to the consumer, you can spread the risks.

Just under 20% of those surveyed said they had switched to reshoring in the past year because of the disruptions. That’s still a minority, of course. But the fact that things are moving is perfectly in line with the reorienting global economy.

Strong investment in logistics dashboards and control towers

Information technology can play an important role in managing logistics disruptions. For example, track-and-trace solutions and control towers provide a detailed view of goods movements throughout the network of suppliers, factories, distribution centers, customers, and transporters.

More than 85% say they have effectively invested in building IT and data-driven ways to improve logistics monitoring. Slightly more than half said that it was a very substantial investment, which was made primarily to overcome the ongoing disruptions.

To be continued …

In summary, this research confirms that Supply Chain leaders are well aware that the current disruptions require decisive action. Thus, they are increasingly turning to dynamic inventory management, innovative technologies, and occasionally even reshoring in their quest for more shock-resistant Supply Chains. It goes without saying that we at Moore will continue to follow developments closely.

Would you like to read the white paper and learn more about Supply Chain resilience?  Don’t hesitate to contact us!