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Supply chain risks: The best and worst countries

When it comes to "offshoring," some foreign shores are better than others.

Workers load packages of corn flour at a distribution center of food company 'Empresas Polar' in Maracay, Venezuela.
Frederico Parra | AFP | Getty Images
Workers load packages of corn flour at a distribution center of food company 'Empresas Polar' in Maracay, Venezuela.

FM Global, a Rhode Island-based mutual insurance firm, released an annual study Tuesday outlining which countries are best — and worst — at hosting companies' supply chains, which are the links that take a product from natural resource through production and ultimately to the consumer.

The study weighs a number of factors, including a country's per-capita GDP, infrastructure and exposure to natural hazards.

Venezuela is the worst country for supply chains for a second straight year, as the Latin American nation faces "extensive corruption, perceived low quality in local suppliers and poor infrastructure," the study said. Venezuela also contends with skyrocketing inflation and a collapse the price of oil, which is the country's most important commodity.

Three other Latin American countries joined Venezuela among the worst countries for supply chains: The Dominican Republic, Honduras and Nicaragua.

The Dominican Republic suffers from a poor geographic location that's vulnerable to natural hazards, and "it scores at the very bottom on how it manages natural hazards," said Bret Ahnell, executive vice president at FM Global.

"You can't change where a country is located, but you can control how you prepare to deal with these hazards," Ahnell said.

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In terms of the best countries, Switzerland overtook Norway as the top nation for supply chains. Last year, Norway and Switzerland finished first and second, respectively.

"Both countries can be viewed as world-class," Ahnell said. "The one primary reason for why both countries swapped spots was the fall in oil prices," which impacted Norway's GDP.

Eight European countries made up the report's top 10, with the U.S.' Midwest region and Canada the only outliers.

In US, the Midwest is king

FM Global's study divides the United States into three large regions: East Coast, West Coast and Midwest.

The Midwest region was the highest-ranking region, coming in at seventh, while the East and West coasts ranked 11th and 21st, respectively. The Midwest "is subject to a variety of natural hazards, but with less exposure than states in the east or west of the country," the research said.

The study, which also divides China into three regions, ranked those areas 57th, 63rd and 66th globally.

Mexico ranked 65th in the study.