Reducing supply chain disruption gets special attention

Research from Ivalua, a global spend management cloud provider, has revealed that almost two-thirds (64%) of surveyed procurement decision-makers say that their organizations’ efforts to ensure supply continuity has increased in priority since the pandemic. In addition, 67% say their companies now collaborate more closely with suppliers to increase supply chain resilience. Yet, despite these efforts and the availability of new platforms and analytics tools, supply chain risk management strategies remain in their infancy post-pandemic.

The “Supply Continuity - A Visual Spotlight” study, based on research conducted by Forrester Consulting and commissioned by Ivalua. The study was conducted in March 2022, of 462 procurement decision makers at companies with 1,000 or more employees in North America, Europe, and Asia Pacific.

Survey results highlight key challenges that remain for organizations to ensure supply continuity. For instance, 30% of respondents say they suffer from an inability to effectively assess the overall risk across suppliers. In addition, 26% agree their organizations lack adequate systems for defining and triggering a response to supply chain disruption. Furthermore, a quarter have an inability to effectively assess the risk of individual suppliers.

The study also found that suppliers will be vital for successfully ensuring supply continuity. Almost seven-in-ten (68%) of organizations view suppliers as a source of differentiation, while 66% now collaborate with suppliers to increase supply chain resilience.

Just over half (51%) of organizations plan to collaborate with more suppliers in the future. This is the number one planned change in supplier strategy for the next two years based on the survey results.

“As global risk factors evolve, organizations could leave themselves unprepared, creating unnecessary disruptions that are largely predictable — and in many cases avoidable,” comments Alex Saric, smart procurement expert at Ivalua. “Black Swan events are expected to come at shrinking intervals, so organizations must think about where disruption will come from and how it will affect global supply chains. But to address this, organizations must learn to collaborate more effectively and build a strong foundation with suppliers to ensure supply chain continuity.”

The study also identified a new approach to supplier management being taken by organizations post-pandemic.

Three-quarters (75%) of respondents say their organizations now include suppliers in medium-term planning and 73% jointly define improvement plans with suppliers and monitor progress. To minimize the frequency and impact of disruption, respondents say their organizations are also implementing automated risk monitoring solutions to proactively notify of risk events (56%), increasing inventory levels (54%), and rationalizing their supplier base to better monitor and engage fewer suppliers (48%).

“Procurement and supplier management have become a central part of supporting strategic priorities for organizations – whether it’s helping to mitigate disruption or improving ESG metrics,” added Saric. “Effective supplier management will be agile enough to identify disruption and the impact it will have on suppliers and take action. But this can only be achieved by investing in processes and systems that enable organizations to collaborate with suppliers and monitor progress and gain rich visibility into every aspect of their supply chain.”

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