Whether they are the result of man-made or natural disasters, supply chain disruptions threaten business profitability. Disruptions cause bottlenecks in production processes and limit the ability to make goods available for consumers. Supply chains are complex webs of interdependencies that can be difficult to understand and manage. This is especially true when supply sources are spread across the globe.

Disruptions are a part of the nature of doing business in a global economy. Companies rely on long supply lines to source materials, produce products and deliver finished goods to customers. Disruptions caused by natural disasters, environmental events, political unrest or global health crises can paralyze entire industries.

When a company experiences a supply chain disruption, it can lead to missed revenue opportunities and lower stock returns. The loss of profit and stock value can negatively impact employee morale and consumer confidence. Fortunately, there are steps companies can take to mitigate these risks.

Having an effective strategy in place to handle supply chain disruptions is essential. This includes having a robust set of risk mitigation tools, like virtual twins, in place to quickly identify and address issues. It’s also important to understand the underlying causes of supply chain disruption so that companies can better assess their risk.

There are several potential causes of supply chain disruption including weather-related events, labour strikes, supplier bankruptcies, terrorism, political unrest, policy changes, international trade restrictions and transportation system problems. In 2023, for example, the price of eggs increased by 70% after the avian flu outbreak reduced egg supplies and the conflict in Ukraine led to slower transit through European routes.