What Manufacturers Should Do As Supply Chain Disruptions Continue

supply chain disruption

Supply chain disruptions can have a huge impact on a business’ expected profits with little-to-no warning. As many know, the COVID-19 Pandemic started the ripple within the supply chain disruption. Then, there was Winter Storm Uri in 2021, which was a weeklong winter storm in Texas that caused blackouts and facility closures across the state. Major industries within Texas were affected and experienced sudden disruptions as a result of the storm.  

In fact, according to the “Allianz 2022 Risk Barometer Report,” 45% of businesses said they had suffered a large impact from recent supply chain issues. One industry, in particular, has taken a huge hit, which is the manufacturing industry. 

It has been 2 years of this disruption, and according to a survey of U.S. supply chain executives from Carl Marks Advisors, more than half of executives do not expect a return to a “normal” supply chain until the first half of 2024 or beyond. Don’t wait until 2024 to protect yourself from these supply chain disruptions. 

Talk to your business insurance agent about coverages you may be missing or want to add. 

One example of coverage that you can get is contingent business interruption coverage. While not common, it can be important in protecting your business against these supply chain disruptions. This type of coverage can provide an important line of defense against losses caused by disruptions at the locations of your suppliers or downstream customers. However, this type of coverage can be limited because it only provides coverage if the businesses you depend on are disrupted by physical property damage only.

While experts are suggesting that this won’t return to normal until 2024, there are steps you can take today to ensure your protection from future supply chain disruptions. Whether it’s unprecedented events, natural disasters, labor issues, or industrial accidents, it’s important to have a plan in place to protect your manufacturing business from supply chain risks. 

Establishing contingent business interruption coverage is important for many, but it should not be your first line of defense. Your business can also be protected by taking the following actions: 

  1.  Identify risks and weaknesses of your supply chain. 
  2.  Diversify your suppliers to hedge their risk exposure.
  3. Create a risk management plan with your business insurance agent. 

There are always going to be risks associated with the supply chain. It’s frustrating that we don’t see an end yet, but these are important steps to take to minimize your risk. Protect yourself now going into a new year and preparing for future disruptions.

If you’re not covered and need someone to talk to, we’d be happy to help you find solutions that are unique to your business. You can learn more about our insurance process here or we’re always available to talk here.

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