Has your organization ever experienced a supply chain interruption? A supply chain is a network between a company and its suppliers, in the production and distribution of products. During the process of moving goods between links in the supply chain, manufacturers have limited control over the risks to which they are exposed. To help mitigate these risks, a variety of supply chain insurance products are available to companies. However, a recent supply chain resilience survey by the Insurance Institute found that 51% of businesses report their supply chain-related losses were uninsured.
If you don’t think you need this type of insurance, here are four reasons to reconsider.
- Every year on average, 80%[1] of manufacturers will undergo a supply chain disruption
That’s right, 80%! A disruption is any event which negatively impacts production and distribution channels. Natural disasters can tie up truck routes, shipping channels, and railroads. But the potential causes of supply chain disruption are more than just floods or earthquakes. Human error, poor planning, political violence, labour unrest, transportation breakdown, machinery malfunction, technological challenges, power interruptions—all can bring your production to a grinding halt.
- In 2017, the number of chain disruptions doubled.[2]
Natural disasters and weather-related events were a significant source of global disruption. North America was hard hit by natural disasters such as hurricanes and forest fires, some of which were long-lasting and are still being recovered from.
- The cost of a single supply chain disruption can run into the millions.
When you have a disruption somewhere in the chain, it disrupts each following link. Raw materials can’t get to your manufacturing facilities, product orders get behind or cancelled, and your business is left trying to manage the fallout.
- 35% of companies experienced damage to their corporate reputation after a supply chain disruption.[3]
When a disruption causes delays, the consequences are not just financial. Late orders, supplier changes resulting in lower quality products, communication mismanagement – all of it can impact your customer experience and damage your reputation.
If you experience a supply chain interruption, and you don’t have the right insurance coverage, the consequences could be devastating. Without adequate insurance, unforeseen and foreseen events can affect revenue and negatively impact your company.
Our Supply Chain Insurance helps manufacturers understand their supply chain, the associated risks and how to protect their organization from disruptions. Talk to one of our industry experts today to learn more about how we can help.
[1] https://www.insuranceinstitute.ca/en/cipsociety/information-services/advantage-monthly/0918-supply-chain-disrutpion
[2] https://info.resilinc.com/eventwatch-2017-annual-report-0
[3] https://www.insuranceinstitute.ca/en/cipsociety/information-services/advantage-monthly/0918-supply-chain-disrutpion
