Supply Chain Failure

Primary reference(s)

Waters, C.D.J., 2007. Supply Chain Risk Management: Vulnerability and Resilience in Logistics. Accessed 25 January 2025.

Annotations

Key relevant UN convention / multilateral treaty

The Sendai Framework for Disaster Risk Reduction 2015–2030 (UNDRR, 2015).

Other multi-lateral treaties such as Basel III (Bank for International Settlements) are cross-sector. For example, Basel III 2017-2028 is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision, and risk management of banks. It sets international standards and minimums for bank capital requirements, stress tests, liquidity regulations, and leverage, with the goal of mitigating the risk of bank runs and bank failures and any cascading impacts (BIS

Drivers

Over recent decades, supply chains have globalised, specialised and become leaner or just-in-time. They are more efficient, and less risky in certain areas, but potentially more exposed to a breakdown of cooperation. With economic instability, food insecurity, technology reduced availability affecting for example., semiconductors, and failure to provide adequate medical supplies in crises supply chain failures are more impactful.

Supply chain managers have encountered many shocks such as the Great East Japan Earthquake and tsunami, Thailand's flooding, the Eyjafjallajökull volcano in Iceland, the maritime piracy upsurge, (Doherty and Botwright, 2020) .and the Coronavirus disease (COVID-19) pandemic (WHO, no date), all of these shook supply chains across entire regions.

Impacts

A 2012 World Economic Forum survey of supply chain professionals ranked disruptions most likely to provoke significant and systemic effects on supply chain networks. The list included pandemics, natural hazards, extreme weather, conflict, demand shocks, ICT breakdowns, and export/import restrictions such as export restrictions currently being placed on medical supplies. Triggers of supply chain disruption are hard to predict, and sometimes neither controllable nor influenceable. The robustness of networks is paramount to ensuring demand can be met with supply even in extraordinary times (Doherty and Botwright, 2020). 

Large-scale natural hazards such as earthquakes and tsunamis can disrupt the entire regional supply chain. As supply chains become more globalized and complex, their vulnerabilities increase. For example, when a flood causes logistical disruptions and a pandemic simultaneously leads to a shortage of labour, recovery of the supply chain becomes even more challenging. Additionally, in complex supply chains, a single disruption can have a cascading effect on other parts, which can accelerate supply chain failure in a multi-hazard context (Ye & Abe, 2012).

Multi-hazard context

The figure below summarises common interactions between supply chain failure and other hazards. This information should be used with caution and not be solely relied upon in Disaster Risk Management, particularly as some interactions may not have been included. Note that hazardous events occurring together or locally in space or time may not necessarily cause, amplify, or be otherwise related to each other. Specific examples of multi-hazard context can be found in the ‘Hazard drivers’ and ‘Impacts’ sections above.

Multi-hazard diagram

Risk Management

It is clear that a supply chain problem can harm critical national infrastructure, national resilience, health, banking and wider sectoral resilience; and even a company’s ability to deliver its services or goods and could impact its viability. The Sendai Framework has a strong emphasis on disaster risk management as opposed to disaster management. The scope of disaster risk reduction has been broadened significantly to focus on both natural and man-made hazards and related environmental, technological and biological hazards and risks (UNDRR, 2015). 

Following large-scale and catastrophic disasters, local organisations integrate with other responding organisations to form hastily developed disaster relief supply chain networks. Unfortunately, even where sound supply chain management practices are used, supply networks have encountered diverse levels of resilience and adequate disaster relief performance has remained elusive (Day, 2014). 

The private sector is a critical participant in the creation of risk-resilient societies. ARISE, the Private Sector Alliance for Disaster Resilient Societies, is a network of private sector entities led by the UN Office for Disaster Risk Reduction (UNDRR). The Philippine Disaster Resilience Foundation (PDRF) provides an example of how ARISE and the impact of its work on supply chain support after the 2013 typhoon. The PDRF reported on a public‐private partnership for a livelihood seeding program in a post‐disaster context working in a post‐disaster scenario in the Province of Leyte: 

• The PDRF designed an early recovery programme with national government agencies, local government units, and international non-governmental organisations – leveraging the capabilities of each organisation in support of micro- and small enterprises and the normalisation of the local supply chain.
• The Post Disaster Needs Assessment provided programme partners with a way forward to support affected communities and livelihood outside of relief packages of ‘starter kits’ including items such as kitchenware, gas stoves and cooking equipment for food business owners and grocery stocks, bags of rice and weighing scales for sarisari storeowners. In helping to jumpstart early recovery, people were provided with the opportunity to help themselves and regain their businesses. They also reported that another benefit of this early recovery activity was the stabilising of market prices for basic commodities and deterring opportunists that prey on the vulnerability of the community’s situation.
• Two months after the Post Disaster Needs Assessment beneficiaries were able to group into clusters/sectors (dressmaking, eatery/carinderia operations, delicacy making, and food vending). Sub-sector members were able to gather, discuss updates on their businesses, identify potential markets, and update themselves with market trends (UNDRR, no date). 

Risk managers, organisational resilience and business continuity leads should be aware of previous disruptions and address the five priority strategies to improve control measures further: risk quantification, scenario planning, data sharing, trusted networks, and multi-stakeholder input to legislation (Doherty and Botwright, 2020). 

The Sendai Framework mentions strengthening the resilience of supply chains as an important goal for disaster risk reduction (UNDRR, 2015). EWS helps to identify risks that could impact the supply chain by providing early warnings before a disaster occurs, allowing for preparedness and response measures. Additionally, when disaster warnings are provided, businesses can take steps to minimize the impact on their supply chains, and communities can develop evacuation plans, making EWS extremely important.

Monitoring

No information Available