Today’s supply management leaders have secured their position as a strategic business function by focusing on high-impact, high-visibility activities. However, managing risk has fallen to the bottom of the list of priorities. As a result, supply chains are often one issue away from a major disruption. Overlooking risk management—or, rather, getting by with a strategy of “hoping our luck holds out”—leaves procurement organizations especially vulnerable in today’s tenuous geopolitical and economic environment, where many public and private companies are in precarious financial positions.
Much has been written about supply management’s broadening of responsibilities over the past decade. These new activities include collaborating with internal stakeholders to define business requirements and priorities to be fulfilled through the supply market, identifying top-tier suppliers to partner with in order to develop more attractive products and services, structuring third-party relationships to ensure they are market competitive and deliver value year over year, and managing risk throughout the extended supply chain.
Although many organizations are now delivering top- and bottom-line value with their strategic supplier relationships, even the procurement leaders have struggled to manage the latent risk in their extended supply chains. Most cite lack of bandwidth and budget as the biggest roadblocks. Dedicating scarce resources to prevent or minimize the impact of an issue that might never occur is often not a priority. What’s needed is a layered, pragmatic approach that uses the best available tools to filter out information noise, capture valuable information, and create powerful insights long before the luck runs out.