A research study launched by Oracle revealed that the majority of businesses in Europe, Middle East and Africa (EMEA) have been unable to protect their value chains against unforeseen events.
The report ‘Managing the Value Chain in Turbulent Times’ surveyed over 600 senior decision makers in large organizations across nine regions to assess how businesses are currently managing their activities.
It examined major aspects of value chain management including risk, managing information, innovation and sustainability.
“It is clear from the study that many large businesses across EMEA have yet to get to grips with their value chain. The survey paints a picture whereby a lack of communication and collaboration, when combined with poor risk assessments and inadequate compliance measures, is putting businesses at risk of significant operational disruption and financial loss,” said Dominic Regan, Senior Director, Value Chain Execution, Oracle EMEA.
Over the past year, 63 percent of businesses across EMEA have reported that they have seen disruption to their systems due to unpredictable events beyond their control, such as economic disruption, adverse weather and bankruptcy of suppliers.
The cost to organizations has amounted to an average of over Shs.56 million (approximately $668 000) per incident and includes costs associated with lost sales, lost customers, product recall and the work involved in having to rebuild the value chain. It has taken 63 days on average to get back to normal operations following an incident.
Despite the disruption being caused to the value chain, 75 percent of organizations admitted that they have not performed a risk assessment on all elements of the chain, leaving them exposed to financial loss.