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Inbound supply chains subject to growing disruption

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Credits-NASA-NOAA-GOES-Project_optInterruptions to the smooth flow of parts to assembly plants are becoming more commonplace, according to research from global insurance broker JLT Specialty.

Recorded incidents last year – typically factory fires, hurricanes and labour strikes – increased by more than 30% compared with 2016 to reach 1,699 , affecting 5,585 suppliers across 10,809 sites, according to the analysis.

Factory fires and explosions were the greatest cause of interruptions at 318 cases, up from 180. Merger and acquisition activity was next at 247 incidents, followed by hurricanes or typhoons at 116.

Regionally, North America suffered the most, with 777 disruptions – more than Asia and Europe combined.

One of the most dramatic examples last year was Hurricane Harvey, which hit the southern US in August.

More recently, a fire at the Meridian Lightweight Technologies’ plant in Michigan caused a parts shortage last month. The incident led to Ford stopping production of the F-150 at its Kansas City plant, Missouri, for a week, while BMW and FCA adjusted their production schedules.

Elsewhere, a truckers’ strike in Brazil interrupted vehicle production there in late May and early June.

London-based JLT says the research findings provide a clear picture of the risks suppliers are exposed to and should help vehicle manufacturers pinpoint weak links in their supply chains.

Though tier two and tier three suppliers are just as likely to suffer interruptions as those in the tier one category, there is usually least visibility in the lower tiers, according to the report.

Matthew Grimwade, JLT Specialty’s head of automotive, said: “Our research shows that automotive manufacturers face some serious challenges – not just in terms of the growing number of disruptive incidents to the supply chain industry, but in the diversity of these events, too.

“Being able to gain an insight into the key areas of exposure and supplier vulnerabilities is essential if automotive manufacturers are to effectively prioritise risk, prepare a plan and protect their business.”

The research was conducted in partnership with US supply chain resilience solution provider, Resilinc.