Typhoons, Tianjin Explosions and Factory Fires Made 2015 a Highly Disruptive Year for the Supply Chain

supply chain disruption Photobank/Adobe Stock

Factory fires and explosions once again were the most widespread supply chain disruptive event in 2015, according to Resilinc’s recently released EventWatch report. This is the third year in a row these events ranked first on the list. 2015 was, overall, a highly disruptive year for the supply chain, with a number of large-scale typhoons hitting Southeast and East Asia, as well as the explosions at the Port of Tianjin causing major damage.

The Resilinc EventWatch supply chain event monitoring system tracks supply chain events around the world that could have an impact, large or small, on a company’s supply chain. Resilinc issues alerts, notifications and “impact” information — all what the provider classifies as a “bulletin” — on events like a hurricane or a labor strike that has the potential to cause a problem in the supply chain. These include events that can cause significant monetary damage, delays and more. Resilinc CMO Wayne Caccamo said the company tracks more than 30 types of incidents that could impact supply chains, from major events like natural disasters to more subtle things like a new CEO at a corporation.

The number of supply chain bulletins reported by the monitoring service more than doubled in 2015 compared with 2014, Resilinc said, with a total of 741 supply chain bulletins published last year. In 2014, 339 events were reported. Factory fires and explosions accounted for 17% of these supply chain alerts in 2015, up from the 13% in 2014.

There are a few causes Resilinc attributed to the overall 118% increase in supply chain events in 2015 from 2014. Other than 2015 being an eventful year, the Resilinc team has expanded and is tracking more events than before. For instance, events like cyber attacks, management changes, reorganizations or a company split, forest fires and regulatory changes were added in 2015 to the list of what Resilinc’s monitoring service tracks, which also played a role in the higher number of incidents recorded in 2015.

Additionally, Caccamo said the company has become a lot more aggressive in getting the word out about possibly supply chain disruptions. He said Resilinc is careful not to sound false alarms and report on a possible event before confirming it has happened. But, Caccamo added, customers were also telling Resilinc to share as much information as soon as possible.

“Our customers don’t want us to be conservative,” he said. “Our customers want us to give them what we know.”

Preparing for Supply Chain Disruptions

Services like Resilinc provide organizations an opportunity to better prepare and mitigate potential supply chain risks. Resilinc does, however, also offer the ability to personalize event information for its users and is able to specifically pinpoint how an event will impact the organization's supply chain, from how much money the event could cost the company to what suppliers in specific parts of the world will be affected. While it is impossible to predict every disruptive event, Caccamo said, the sooner an organization knows about an incident, the sooner it can put its response plan into action.

“The idea is to basically to be vigilant and as proactive as you can,” Caccamo said. However, when you can’t be proactive, he added, “you have to be responsive.”

Resilinc also sees supply chain event monitoring as a competitive tool. Being informed about a disruptive event in your supply chain can mean a quicker reaction and a quicker recovery time. Businesses that know about these events first could be back up and running sooner than competitors after a disruption has occurred, Caccamo said.

Additional Report Data

As stated earlier, factory fires and explosions were the most common event type recorded in the Resilinc report. But these events had the largest impact specifically on the automotive industry — just as they did in 2014 and 2013.

Mergers and acquisitions were the second most common supply chain disruptive event reported in 2015. Labor strikes or disruptions, which were the second most common event in 2014, took the third spot last year.

Typhoons in Asia and the chemical explosions in Tianjin, China, topped the list of major supply chain disruptions, with the largest revenue impacts in 2015, according the Resilinc report. Typhoon Soudelor, which hit Taiwan in August 2015 and was categorized as the strongest storm of the year at that point, was the No. 1 most disruptive supply chain event in terms of revenue impact. Resilinc estimated the revenue impact of the typhoon as more than $20 billion, with total recovery time lasting 29 weeks and impacting a total of 2,401 sites.

The Tianjin explosions in China, which ranked No. 3 on the list of most costly supply chain disruptions, caused an estimated revenue hit of more than $9 billion, Resilinc said in its report. Total time to recovery after the event was 37 weeks and a total of 159 sites were affected.

First Voice

  1. Bill Kohnen:

    Interesting that a new CEO at a supplier could be a threat. Another big threat is when a company puts in place a new ERP system. Perhaps not as big a threat these days but still can result in havoc with deliveries, inventory, customer service etc…

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