Adapting And Rethinking Supply Chain Strategies For New Realities
by Des Nnochiri for WBR UK, 30 March 2021
The worldwide health, social, and economic upheaval due to COVID-19 has left supply chain management in an uncertain atmosphere in which the ability to rapidly redesign the supply chain and mitigate risk are now critical to the survival of business organisations. Though risks and challenges plague the supply chain there are opportunities too -- and Chief Procurement Officers must now consider how best to exploit them and remain agile, so as to stay ahead of future uncertainties.
In a survey of 200 procurement executives, WBR Insights sought the views of CPOs about the health of their supply chains, their attitudes to risk and opportunity, and how ever-changing conditions are shaping their internal procurement strategies.
Monitoring Supply Chain Health
From the survey analysis, less than a quarter (24%) of CPOs strongly agreed with the statement, “we have the right metrics and data to measure the health of our supply chain.” One of their major concerns was having the ability to quickly identify and act on problems in the supply chain early on, thereby enabling them to reduce the impact on their procurement teams and on overall business operations. In order for CPOs to get a clear picture of the health of their supply chain and the risks and opportunities it faces, they must have the right quantitative data at the right time, together with the ability to digitally model alternate supply chain scenarios and systems and tools capable of identifying and acting on problems quickly. With these in place, they can then understand the potential detrimental effects of inventory carrying cost, workforce utilisation, cost to serve, and third-party risk on end-to-end supply chain stability and continuity.
Identifying And Managing Risk
Nearly 60% of the CPOs surveyed said that they are not very confident in their ability to identify operational risk in their supply chains. In the area of third-party risk, data-driven oversight of the supply chain is particularly important, highlighting the need for supply chain management systems powered by artificial intelligence.
Fostering Operational Resilience
With payment practices acting as an indicator of the strength or weakness of supplier relationships, leveraging digital innovation to provide highly configurable and customisable payment solutions that streamline the process enables procurement departments to offer suppliers attractive terms supported by the appropriate payment methods and providers.
Taking An Enterprise-Wide View Of Supply Chain Risk And Mitigation
Significantly, 99% of CPOs surveyed said that risk should be the responsibility of the entire business, not just a few individual teams -- and that everyone should be held accountable for it. Agile organisations can take steps to make sure that responsibility for risk management is shared equally across multiple departments. Though fewer than 65% are managing their supply chain risk with a comprehensive Business Spend Management (BSM) platform which provides visibility into all areas of third-party spend, the adoption of innovative tools and technologies to stabilise and support their vulnerable supply chains, together with an enterprise-wide view of risk and its mitigation breeds an internal culture in which everyone has a part to play in risk management.