Looking to make your supply chain more resilient? Measure it.
While supply chain disruption can be widespread, organizations that are able to better weather this disruption often have one notable trait in common.
For supply chain leaders, managing disruption is becoming more common. In fact, based on a Deloitte Global survey of over 1,000 supply chain executives, nearly 80% say their organizations have experienced an adverse supply chain event within the last 12 months.1 These events or disruptions can manifest in myriad ways: Geopolitical tensions, new regulations, or an unexpected climate event all can cause a once-reliable supplier to shut down suddenly.
Given the wide-ranging nature of disruption and potential outcomes, it may not be surprising that just under 22% of survey respondents strongly agree their supply chain functions have proven to be resilient against these external shocks in the past 12 months. What is it that makes this small subset of organizations more able to manage disruption than others? Our analysis shows those that measure their effectiveness in responding to supply chain disruption tend to be more resilient at both global and regional levels.
The figure highlights how leaders who employ metrics to measure supply chain disruptions believe they are 3.4 times more likely than others to also report their supply chains have better weathered external shocks and crises over the last 12 months (that is, 55% who strongly agree their organization has clear response metrics compared with only 16% for those who do not strongly agree). This pattern is consistent across those surveyed globally, as those with clear metrics regularly manage disruption at a rate higher than their regional peers. One reason for this may be leaders using these metrics could be better able to understand the disruption and therefore able to respond better to it.
That said, it’s important that organizations choose the right metrics based on their organizational priorities. For some, the metric could be downtime for a particular step or process; for others, unavailability of raw materials; while for others, the time taken from production to sales before and during disruptions. Overall, an organization should work to match metrics to its unique business needs and resilience objectives.2