The four dimensions of supply chain risk in 2024: A look back
If we learned one thing in 2024, it’s that the threats facing organizations are no longer isolated. Sphera research reveals an increasingly complex and interconnected ecosystem where failures in one area can trigger ripple effects throughout an entire operation.
Thankfully, emerging predictive technologies can now alert organizations to oncoming risks before they become catastrophic.
Here’s the story as told by the data.
Waning supplier financial health reached new levels of urgency but also new levels of visibility. In fact, 2024 was the first year where preventive insights surpassed event-based risk insights.
The takeaway
Financial viability risk is increasingly detectable. Companies must integrate financial health metrics and supplier audits into daily operations to stay ahead of threats.
48
Increase in bankruptcy filings and force majeure declarations rose by 61%.
8
Supplier viability alerts per organization per year, or nearly two per quarter.
11
Growth in early-warning signals related to supplier viability compared to 2023.
Delivery risk: Evolving beyond logistics
The takeaway
Companies need all-encompassing risk mitigation frameworks that accommodate both man-made and environmental events.
Delivery failures dropped by 7%
compared to 2023, but disruptions
occurred more frequently with
nearly 15 disruption events per
company on average.
Labor strikes continue to account
for the majority of disruptions, with
an average of 11 events per
company each year.
Natural hazards are becoming
more frequent and more severe:
Tornado exposure: +21%
Tsunami-related risks: +160%
Volcanic disruptions: +104%
Flash flood activity: +53%
Image and compliance risk: ESG tightens its grip
Environmental, Social, and Governance (ESG) risks are no longer isolated compliance concerns. They are now central to both supply chain integrity and corporate reputation.
The takeaway
No longer peripheral, ESG risks are now foundational to supply chain strategy. Compliance is a bona fide risk that impacts both financial health and brand reputation.
ESG-related risk indicators rose 6% compared to 2023, with 10 relevant threats materializing per year, or almost one per month.
FDA warning letters increased by 48.6%, indicating an uptick in both regulatory action and compliance failures.
Human rights violations surged 29% in 2024 with social compliance corrective actions skyrocketing by 143%.
The takeaway
Quality issues are integral to product integrity, customer loyalty and regulatory compliance. Organizations must think beyond reactive recalls to proactive quality management.
Quality risk: A quiet but growing threat
Increasingly systemic, quality issues now arise from deeper in the supply chain and often remain undetected until further into the production process.
Field quality incidents such as product recalls increased by 19%, underscoring the growing importance of quality assurance throughout the supply chain.
Quality issues stemming from tier-1 and tier-2 suppliers increasingly cascaded into OEM-level failures, creating reputational damage for these manufacturers.
Scrutiny around sustainable practices reveals a rise in hazardous materials issues, with 54% percent of the failure points and risks associated with these substances.
