Supply chain disruptions may have caused up to $4 trillion in lost revenues
Sixty-four percent of US and European companies report revenue losses of between six and 20% in 2020
Reports of huge revenue losses and significant damage to brands have been found in a GEP-commissioned survey of US and European business leaders, with nearly half (45%) reporting that COVID-19 "significantly" disrupted their supply chain.
According to the report, while COVID-19 was a significant factor, it was only one of the disruptive forces that strained and occasionally broke supply chains.
Respondents also cited cyberattacks (36%), commodity pricing fluctuations (33%), and diverging regulations (32%). This has resulted in one-third stating their "operational costs increased" significantly as a direct result of supply chain disruptions, and 38% of companies with revenue greater than US $1 billion reporting significant damage to their brand.
In particular, American firms have been beset by a variety of problems amidst a U.S.-China trade dispute.
These disruptions are expected to become more common, and geopolitical risks including regional trade policy, instability and corruption represent an organisation's biggest concern (31.5%) over any other factor, including increasing labour costs in supplier countries.
The report also showed there has been a major shift in global supply chain strategy as redundancy and resilience are deemed more important than speed and efficiency. Sixty percent of respondents agree that "redundancy and resilience in their company's supply chain are more important than speed and efficiency,” and more than half of the executives surveyed (54%) say that organizations must make significant changes to effectively manage supply chain disruptions in the next five years.
Forty percent of businesses are adjusting sales and pricing strategies and adapting to evolving customer preferences because of the disruptions. Another 40% are also ensuring availability of lines of credit from investors and funders due to this.
Companies are therefore pursuing a range of actions to mitigate the impacts of future disruptions, including strengthening relationships with existing suppliers and implementing permanent supply chain risk management teams and processes. Companies look to also be accelerating investment in digital technology, and integrating supply chain and procurement more closely with finance and IT.