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June 2013

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Study Finds Enterprises Remain Vulnerable to Value Chain Risks

A new research study published by Oracle reveals that a majority of businesses across Europe, the Middle East, and Africa (EMEA) are unable to protect their value chains against unforeseen events, which has far-reaching implications for both supply chain and procurement professionals in terms of the risks associated with their value chains.

The report, “Managing the Value Chain in Turbulent Times,” surveyed 677 senior decision-makers at large organizations across EMEA to assess value chain risks, information management, and technologies.

The research uncovered surprising results in a number of areas including these five areas.

  • Breakdowns are pervasive. Over the past year, 63 percent of EMEA businesses reported value chain disruptions due to events beyond their control, such as economic disruptions (24 percent), adverse weather (19 percent), and supplier bankruptcies (16 percent).
  • Disruptions are costly. It took an average of 63 days for business to resume normal operations following a disruption, with costs averaging US$780,000 per incident. Financial consequences came in the form of reduced sales, lost customers, product recalls, and resources spent rebuilding value chains.
  • Technology barriers stifle communication and collaboration. Sixty-one percent of the respondents blamed data and technology problems for internal communication breakdowns, while 56 percent said these inadequacies hinder external collaboration. Nearly a quarter of the executives cited incompatibility as the cause of technology shortcomings.
  • Businesses struggle with communication and collaboration. Eighty-two percent of senior decision-makers stated that their employees are generally bad at keeping them informed. In addition, 85 percent said their people struggle to provide timely information about products and services.
  • Risk is undocumented. Seventy-five percent of organizations admitted they have not performed a risk assessment on all elements of the value chain—58 percent of these organizations have been the victims of disruptions.

As a result of these findings, the report concludes that businesses in EMEA should focus on enhanced risk assessment and communications channels to improve value chain recovery.

Download a full copy of “Managing the Value Chain in Turbulent Times.”

Learn about Oracle solutions that can help enterprises address many of the risks highlighted in the survey, including Oracle Value Chain Planning, Oracle Value Chain Execution, and Oracle Advanced Procurement.

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