A staggering 72% of FTSE 100 firms list threats to their supply chains among the principal risks facing their business, according to research from INVERTO.
The past few years have been dominated by unprecedented challenges to global supply chains.
From the Suez Canal blockage and COVID-19 pandemic to the Red Sea shipping crisis, a succession of major events has highlighted the fragility of many organisations’ supply networks.
Now, a staggering 72% of FTSE 100 firms list threats to their supply chains among the principal risks facing their business, according to research from INVERTO, the specialist supply chain management arm of Boston Consulting Group.
This figure underscores just how fundamental the smooth running of supply chains is to profitability and continuity at these major corporations.
“The severity – and short notice – of disruptions in the Suez Canal and Red Sea were real wake-up calls for businesses,” says Lina Tilley, Principal at INVERTO.
“They were a powerful reminder that a geographically distant and narrow supply base can become a major business risk.”
Firms playing catch-up on risk management
INVERTO’s research finds just 54 FTSE 100 companies provide shareholders with details on how they are mitigating these supply chain risks.
This suggests many large organisations are still playing catch-up when it comes to developing robust risk management strategies.
Shedding light on how firms can bolster their supply chain resilience, Lina continues: “One way companies can reduce their supply chain risks is by having alternative supply chains.
“This can include building multiple supply chains in different countries to ensure that an unexpected impact on one doesn’t become a business-critical event.”
Risk management strategies reported by FTSE 100 companies over the past year include:
- Regular meetings with suppliers to ensure potential risks are shared and monitored
- Compiling and updating a ‘risk register’ to document the risks facing particular suppliers
- Holding higher levels of ‘buffer’ stock to mitigate the impact of short-term crises
- Diversifying supply chain streams to ensure damage to one does not cause business interruption
Harnessing technology
Unsurprisingly, many FTSE 100 organisations are exploring how technology can be leveraged to prevent supply chain disruptions.
This includes rollouts of cybersecurity measures, increased use of AI in supply chain design and monitoring and the deployment of algorithms to identify high-risk raw materials.
Elsewhere, several companies are carrying out thorough reviews of their suppliers’ finances and infrastructure.
Crucially, a number of FTSE 100 firms have also confirmed that supply chain risks are now being discussed at the highest levels, with both executive committees and audit committees taking an active role in risk mitigation.
The events of the past few years have been a wake-up call for businesses worldwide. For FTSE 100 firms, the message is clear: to navigate future disruptions and safeguard their profitability, investing in supply chain resilience is now an urgent priority.
By diversifying their supplier networks, leveraging technology, and elevating supply chain risk to the boardroom, these organisations are taking critical steps to future-proof their operations.
