It took only minutes in 2011 for natural disasters to break apart supply chains that took global companies 30 years to build.
As a result, companies worldwide moved supply chain insurance to the top of their corporate agendas. Supply chain/business interruption losses are the largest unknown; but for context, already insured companies incurred more than $55 billion in losses in 2011. Today companies can insure carry up to $1 billion in supply chain insurance, ranging in cost from 2% to an undisclosed a la carte pricing determined by presented risk. Supply Chain insurance went from a “nice to have” to a matter of national criticality, as evidenced by a Presidential directive in January this year, when President Barack Obama directed the Departments of State and Homeland Security to come up with a plan to protect the $14.6 trillion U.S. economy from interruptions in the supply chain. The White House released a National Strategy for Global Supply Chain Security to make recommendations on identifying risks and making commercial infrastructure more resilient.
“We have seen that disruptions to supply chains caused by natural disasters — earthquakes, tsunamis and volcanic eruptions — and from criminal and terrorist networks seeking to exploit the system or use it as a means of attack can adversely impact global economic growth and productivity,” President Obama said in a letter earlier this year.
Are you insured for Storm Season?
As companies swept up and wrung out after the carnage to their bottom lines, it is understandable that they’d want a policy to help pay for the damage. Yet, that is only part of a smart insurance plan. In fact, just like the medical industry has evolved to drive a heavy pre-emptive care agenda to boost healthier living and mitigate avoidable health issues, so too should businesses explore pre-emptive supply chain insurance.
Indeed, many are. According to International Data Corporation, a leading technology research firm, the #1 supply chain “solution” for manufacturers is Sales & Operations Planning. S&OP –a process established nearly 30 years ago –uniquely unites together people and process to better balance supply and demand. Yet, over the past decade—driven by global business volatility—S&OP has garnered a new level of attention and leverage
