Top ten threats to logistics: reputational damage

Top ten threats to logistics: reputational damage

Continuing with our ‘top 10 biggest threats to logistics’ as given by industry experts, this week we’re looking at reputational damage. 

During the Supply Chain Risk Management and Mitigation Workshop F&L Conference in Gothenburg in May last year, the audience were asked from their own business perspective, what they thought were the biggest threats to the supply chain.

Reputational Damage 

The importance of reputational damage is too frequently ignored. Financial compensation can be as important to your stakeholders as an acknowledgement of failure. Reputational damage can be caused by many different factors, but mainly, it’s how an organisation responds to disruption.

Organisations must be seen to be honest with their stakeholders whilst considering the welfare of their staff. As can often be seen in the news, if one element fails, the company can face huge reputational backlash.

The results of reputational damage can firstly be a loss of customers. If an organisation’s customers feel that they have been lied to or inconvenienced by a disruption that wasn’t dealt with appropriately, they are likely to take their business to a competitor.

Customers may also choose to share their anger on social media platforms which further damages the reputation of the organisation and requires a proactive damage limitation process by trained staff.

Secondly, organisations may be obliged to provide compensation for injury, loss of products or services, or inconvenience to customers. This may improve reputation and customer feedback, however the financial impacts of this can be significant. Loss of sales and custom as well as the expense of compensation could, in the worst case, lead to organisational failure.

To minimise the risk of reputational damage be honest. If an organisation is honest to their stakeholders throughout disruption, those stakeholders will be more likely to have trust in the organisation and their ability to resume business and return to normal. This type of response builds confidence.

Secondly, have plans in place. Reputational protection planning is of vital importance. Organisations must ensure that their staff are trained and capable of responding to negative press. If this requirement isn’t met, they run the risk of causing more damage through unplanned or inappropriate responses which could, in the same way as financial impacts, lead to organisational failure.  

Top Ten Threats to Logistics

Threat 1 – Insider Threat

Threat 2 - Theft

Threat 3 – Unexpected Incidents

Threat 4 – Terrorism

 

 

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