Goods stuck at a port because bribes need paying. A natural disaster that wipes out a year’s worth of crops. Roads that become impassable when it rains too much. Anything from small snafus to huge disasters can stop a country’s infrastructure and economy. But the question is how quickly its economy can bounce back to normal so its companies can function and it can keep providing for its citizens.
The FM Global Resilience Index ranks and scores countries across nine factors, illuminating their supply chain resilience, and, really, resilience in general. Across political risk, exposure to natural hazards, and infrastructure quality, the index quantifies a nation’s ability to withstand a disruption and bounce back, so products can get to where they need to go.
The latest version of the ranking, which comes from a Rhode Island-based insurance company, has Switzerland in first place, followed by Norway, with Ireland, Germany, Luxembourg, the Netherlands, the central United States, Canada, Australia, and Denmark counting out the top 10 places. These are places where companies can be confident of efficiently running their supply chains.
The index praises Switzerland’s infrastructure (the trains always run on time!), its local suppliers, and its resistance to oil shocks and shortages. FM Global measures this by looking at how efficiently countries use oil, dividing GDP by oil consumption.
At the other end of the scale is Venezuela, which comes last in the list of 130 countries. In contrast to Switzerland, it is susceptible to earthquakes and tornadoes, plagued by corruption, and has poor roads and trains. “A major hurdle facing many countries in the bottom 10 is simply geophysical location. Countries in the Caribbean and Central America are exposed heavily to the twin natural hazards of wind and earthquake,” the report says.
Also bad places to get supplies from, according to the index, are the Dominican Republic, the Kyrgyz Republic, Nicaragua, Mauritania, Ukraine, Egypt, Algeria, Jamaica, and Honduras.
FM Global argues that companies often seek out cost advantages at the expense of supply chain security. The index aims to give a deeper sense of “the drivers of resilience,” while “underlining the strategic nature of supply chain risk management.”
The United States is split into three separate regions: East, Central, and West. The Central area is seen as most resilient (7th place), followed by the East (11th) and West (21st place). Armenia (52nd place) and Malawi (84th) both rose compared to last year’s index. Cameroon (103rd) and Morocco (89th) both fell. Relative efficiency in using energy was a key reason for countries rising and falling this year.
See the full 2016 ranking here.