Technological advancements, digital transformations, new roles, reshoring and offshoring, sustainability programs – and really, most aspects of supply management – have one thing in common: disruption .
Disruptions 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, Conn.-based research consultancy conducted a survey in June and July focused on looming risks in procurement operations and steps to mitigate them.
“CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events,” Andrea Greenwald, senior managing analyst in Gartner’s supply chain practice, said in a press release. press. “They are beginning to understand that the reactive measures they have employed to manage risk over the last four years will not be enough for the next four.
According to the survey of 258 procurement professionals asked to choose the top four risks to future procurement success, disruption topped the list at 42 percent, followed by: macroeconomic factors (33 percent), trends geopolitical issues (32 percent) and compliance issues (32 percent). percent).
Other risks mentioned were supplier capabilities and capabilities (30%), cyberattacks and data security (29%), and procurement talent capabilities (24%). Rankings below 20% were poor data quality, slow, overly manual processes, inability to influence business partners, fluctuating business priorities, and energy availability and cost.
Recent disruptions, including Hurricanes Helene and MiltonTHE East Coast Port Strikethe Red Sea crisis, the Russo-Ukrainian war and even the coronavirus pandemic – and their impacts have caused disruption at the top of the rankings. The unpredictability and speed of these disruptions are also contributing factors, according to Gartner.
Economic downturns, inflation, and other economic dynamics are among the second-ranking macroeconomic factors. Lately, along with ongoing geopolitical issues and increasing regulations – and disruption – have dominated procurement discussions.
What can organizations do to mitigate disruptions and other challenges? Gartner suggests CPOs:
- Carry out a risk assessment, prioritizing the risks likely to have the most impact on their business. Also determine the impact and velocity of each risk, taking into account organizational maturity and industry-specific factors.
- Collaborate internally, working with other functions to form teams to address macroeconomic factors and compliance issues.
- Collaborate with external stakeholders (suppliers) who are essential to the supply chain. “Segment vendors that provide critical goods and services to the organization,” a Gartner release says, “and implement techniques to proactively protect the organization.”
“The need to establish a strategic supplier risk management program has never been more critical,” Greenwald said. Businesses that fail to do so now will face considerable difficulty in the next crisis, she said.