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• Globalisation – it allows transferring production capacities to developing
countries, achieving cost savings and entering new markets. However, global
chains are exposed to greater disruptions because of their complexity and
size, further extending logistic flows; an important role is also played by
cultural differences.
• Outsourcing – the original benefits of outsourcing are cost reductions and
allowing the company to concentrate on its key business activities. However,
these benefits are balanced by increased vulnerability to disruptions in terms
of loss of control and further breakdown of the supply chain into a more
complex system that is more difficult to control.
• Lean processes – the reason behind the lean approach is, again, the costs
that are spent inefficiently and are thus “wasted.” A typical example includes
excessive inventory or multiplication of suppliers in the supply chain.
However, if these “buffers” are not available, it is much more likely to be
affected by a disruption.
• Centralisation – enables the cost savings achieved by economies of scale,
mainly thanks to better possibilities for distribution of fixed costs. The
degree of centralisation however goes hand in hand with decreasing flexibility
of the chain and the result is, again, increasing its vulnerability. With maximum
centralisation, the failure of the entire systemcan be caused by a single disruption.
• IT-dependence – logistic flows in today’s supply chains are very closely linked to
IT systems. The failure or instability of IT systems may disrupt the continuity
of these flows.
• Complex products and services – the complexity and diversity of today’s
products are constantly increasing. This increase goes hand in hand with
increasing complexity of a supply chain behind the given product. The level of
complexity then increases the vulnerability of the supply chain to disruptions.
• Deficit of information – good information management is one of the basic
prerequisites of supply chain management. Insufficient sharing of information
and knowledge among the individual companies exposes the chain to more risk.
• Specialised factories – special, irreplaceable components of the supply chain
have the same impact on the supply chain as centralisation – they reduce
flexibility, thus increasing the vulnerability.
• Volatility of demand – increasing instability of demand leads to its more
difficult predictability thus increasing the vulnerability.
• Technological innovations – progress and research are the engines of business.
Without innovations, companies and the whole supply chains would quickly
become unable to compete. Innovations also increase the vulnerability because
it represents novelty and change.
Any serious disruption will have a typical profile in terms of its effect on company
performance. Supply chain performance can be measured by sales, profits or level of
production. The nature of the disruption and the dynamics of the company’s response
can be characterised by the eight stages described in Figure 1.10: