Causes Of Supply Chain Disruption

There are a multitude of potential causes of supply chain disruption that can hamper a business’s ability to sell and deliver more products. Below are a few of the more common causes. 

Fluctuation In Demand

Whenever the demand for a product fluctuates, it causes a supply chain disruption. In the case of a drop in demand due to an internal change such as less marketing or a change in the design or process of a product, it’s easier to predict and take the measures accordingly. In unexpected cases, such as the appearance of COVID-19 that forced people to stay home, the airline industry experienced an enormous disruption. 

Businesses can also face a disruption when there is a sudden or massive demand for their products that was unexpected–this is called a demand surge. Some demand surges are predictable and can be handled efficiently, such as the demand for different products during the holiday season. 

Still, unpredicted and large events like pandemics can disrupt the supply chain at a completely different level. An example of this type of demand was the toilet paper shortage in the U.S. during the pandemic. 

Cyber Security Threats

Cyber attacks are one of the most serious modern threats to the process of supply chain management–they can cause disruptions on a very large scale. In some cases, the effects of cyber attacks on a supply chain can be more severe than those of natural disasters and weather conditions. 

Cyber attacks are unpredictable. They can hit a business from anywhere, at any time, and can sometimes cause irreparable and irreversible financial and reputational damage. Businesses have to navigate many online functions, operations, and processes in order to stay ahead of the competition, and access to global markets has created many new business opportunities. However, new risks such as cyber attacks and data security threats are a serious challenge for businesses.

Most companies focus on cyber threats within their internal systems and forget to assess their entire supply chain. To avoid supply chain management issues, some larger companies do a risk assessment of their suppliers for cyber-attack threats.

As a business, you can’t eliminate the risk of cyber attacks, but you can mitigate the risk to a large extent through regular audits of your supply chain and by educating your suppliers about best practices. With a well-managed supply chain, you can reduce the chances of an attack damaging your operations and processes. 

Natural Disasters 

Natural disasters are inevitable, unpredictable, and can disrupt supply chains. When a part of the world is facing an earthquake, flood, tsunami, hurricane, or any other form of natural disaster, it can disrupt supply chains with:

• Congested ports
• Delayed or postponed deliveries
• Delayed or postponed cargo flights
• Imbalanced supply and demand

The level of supply chain disruption can be affected by the severity of a disaster. At its worst, a natural disaster can bring an entire supply chain to a complete stop. Recovering or resuming the business operations can take a lot of time, effort, and resources. 

For example, during the earthquake and tsunami in 2011, Japan incurred losses of $210 billion, which heavily impacted the global supply chain. It’s hard to predict the effect of natural disasters in advance, but businesses can take measures to ensure a quick recovery. These steps include:

• The development of a disaster response system and recovery plan
• Consistent communication with supply chain managers
• Understanding the risk to a business’s reputation