Supply chain disruption – when an event occurs that stops the flow of goods from raw materials to manufacturing and then to consumers – can have devastating impacts on business performance. These include missed revenue from delayed sales, costs from expedited shipping or product substitution, and loss of customer loyalty. Ultimately, companies that struggle to overcome frequent supply chain disruptions may lose market share to competitors who can respond to disruptions more effectively.
These events range from natural disasters (such as hurricanes and earthquakes) to global pandemics, power outages or supplier bankruptcies. Geopolitical events like wars, political instability and sanctions can also snarl supplies by closing ports, restricting trade or blocking the movement of goods.
While it’s impossible to avoid all disruptions, a proactive approach is possible, starting with better visibility and agility in the supply chain. Companies can increase flexibility by diversifying sourcing and embracing technology solutions that help streamline operations and minimize risk. Regular training and communication with all stakeholders can further improve resilience against supply chain challenges.
Consumers are also increasingly affected by supply chain disruption, with many halting purchases or seeking alternatives. A recent o9 Solutions survey found that 59% of respondents reported direct impacts on their purchasing habits from cost increases or delays in product availability. In the long term, this can lead to erosion of brand loyalty and increased competitive pressure.