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Stronger supply chains mean smaller losses

At a glance

  • SMEs could save £200,00 a year by implementing safeguards in their supply chains

New research from Zurich could help you to encourage your mid-corporate clients to take the necessary steps to potentially save an average of £200,000 a year and mitigate the risks they carry in their supply chains.

In a report entitled The Weakest Link, UK Plc’s Supply Chain, Zurich outlines its findings from interviewing 500 companies with a turnover of between £5m and £300m.

Across the board, 88% of those questioned said they had experienced significant disruption in their supply chain over the last 12 months, at an average cost of £200,000.

The better you can help clients manage and mitigate these risks, the faster they can begin to realise the potential savings, and Zurich has the in-house expertise available to help you.

The 500 businesses that Zurich canvassed operated across the following sectors:

  • Manufacturing
  • Technology
  • Wholesale
  • Sport, Leisure & Entertainment
  • Food & Beverage

These sectors are all covered by Zurich’s Corporate Focus programme and the insight provided by this unique and detailed research adds significantly to the expertise already on offer to you and your clients. It also builds on the work Zurich has been doing with clients over the last three years to improve their supply chain risk management (see www.supplychainriskinsights.com).

Causes of supply chain disruption

The average supply chain disruption lasted for five weeks and the most common causes were around product quality, the weather and unplanned outages of IT services.

Companies reviewing their supply chains should:

  • Identify all critical suppliers – not just direct suppliers
  • Focus on the relationship and management of critical suppliers
  • Achieve improved visibility of key products for the entire supply chain from raw materials to end-users
  • Analyse the impact of failure on profits and output
  • Ensure that the Board takes responsibility for supply chain risk management
  • Take a holistic approach to supply chain risk management; threats to supplies of key raw materials and components can come from both physical and non physical causes

Source: Zurich report: The Weakest Link, UK Plc’s Supply Chain.

Time and resource pressures on businesses make it difficult for them to review and update their approach to supply chain management. However, the risks that build up are significant and can be debilitating for many of them.

Indeed, it is alarming that only 17% have contingency plans in place and check that their top suppliers also have similar contingency arrangements should unexpected problems arise.

The current landscape around supply chains presents a major opportunity for you to speak with your clients about risk management and how they can better protect their businesses for the future.

The good news is that this is an issue that is gaining in commercial importance for companies as they realise the negative impact supply chain disruption can have.

Almost 70% of companies said they were going to put a greater focus on reviewing supply chain risks over the coming year, and this should provide you with all the encouragement you need.

To help you offer the sort of guidance and assured service that your clients will benefit from, Zurich has developed sector specific expertise that is available to you and your clients.

Operating on this per sector basis, Zurich understands the unique issues that each market faces and has developed individual solutions to cater for them.

Essentially risk management solutions revolve around four options and these are: avoidance, reduction, transfer and retention.

Boosting resilience against the unexpected

Working with you and your clients, Zurich can help generate the most appropriate solution for each one and help it reduce the risks carried by its supply chain and improve its resilience to unexpected shocks in the future.

Given that supply chains are regarded as either important or critical to business by 80% of those that took part in the research, it is essential to make them as robust as possible.

Zurich wants to work in partnership with its brokers and to add value for their clients, and this is an example of where the product, service and expertise available add up to a lot more than an insurance policy.

The full report can be found at: www.zurich.co.uk/expertise. Your Zurich contact will also help you to find out more about the full proposition on offer around supply chain risk management.

Companies reviewing their supply chains should:

  • Identify all critical suppliers – not just direct suppliers
  • Focus on the relationship and management of critical suppliers
  • Achieve improved visibility of key products for the entire supply chain from raw materials to end-users
  • Analyse the impact of failure on profits and output
  • Ensure that the board takes responsibility for supply chain risk management
  • Take a holistic approach to supply chain risk management; threats to supplies of key raw materials and components can come from both physical and non physical causes

Source: Zurich report: The Weakest Link, UK Plc’s Supply Chain.

For more information on helping your customers identify and manage their supply chain risks, please speak with your local Zurich contact.

Image © Getty

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