Keeping On Top of Supply Chain Disruption

Advancements in technology, digital transformations, new roles, reshoring and nearshoring, sustainability programs — and really, most things supply management — have one thing in common: disruption.

Disruption can be caused by challenges, changes, trends and more. And for procurement, it’s the No. 1 threat to its future success, according to Gartner.

The Stamford, Connecticut-based research consultancy conducted a survey in June and July that was centered around impending procurement operations risks and the steps to mitigate them.

"CPOs’ concerns about supply disruptions reflect the often-unpredictable nature and potentially existential impacts of these events,” said Andrea Greenwald, senior director analyst in Gartner’s supply chain practice, in a press release. “They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”

According to the survey of 258 procurement professionals asked to choose the top four risks to procurement’s future success, disruption came in first, at 42 percent, followed by: macroeconomic factors (33 percent), geopolitical trends (32 percent) and compliance issues (32 percent).

Other risks mentioned were supplier capability and capacity (30 percent), cyberattacks and data security (29 percent), and procurement talent capabilities (24 percent). Ranking below 20 percent were poor data quality, overly manual slow processes, inability to influence business partners, fluctuating company priorities, and energy availability and cost.

Recent disruptions ­— including hurricanes Helene and Milton, the East Coast ports strike, the Red Sea crisis, the Russia-Ukraine war, and even the coronavirus pandemic — and their impacts prompted the top ranking for disruption. The unpredictability and velocity of such disruptions also were contributing factors, Gartner said.

Economic downturns, inflation and other economic dynamics are among the macroeconomic factors that led a No. 2 rank. These, and ongoing geopolitical issues and increasing regulations — and disruption — have dominated procurement conversations of late.

What can organizations do to mitigate disruption and other challenges? Gartner suggests that CPOs:

• Conduct a risk assessment, prioritizing those risks that are likely to most impact their companies. Determine each risk’s impact and velocity as well, accounting for organizational maturity and industry-specific factors.
• Collaborate internally, working with other functions to form teams to address macroeconomic factors and compliance issues.
• Partner with external stakeholders ­— suppliers — that are critical to the supply chain. “Segment suppliers that provide critical goods and services to the organization,” a Gartner statement said, “and implement techniques to proactively safeguard the organization.”

“The necessity of establishing a strategic supplier risk management program has never been more critical,” Greenwald said. Companies that neglect to do so now will face significant struggles when the next crisis comes, she said.

(Image credit: Getty Images/At-lantica)