Collaborate or Capsize: Research Highlights Supplier Collaboration is Critical to Minimize Supply Disruptions
Research from Ivalua, a leading global spend management cloud provider, has revealed that 66% of organizations believe better collaboration with suppliers is needed to help increase supply chain resilience. The growing number of Black Swan supply chain events, such as the war in Ukraine and the COVID-19 pandemic, has led many organizations working to minimize the impact of disruptions. However, key barriers remain, including an inability to assess risk and collaborate with suppliers, as well as inadequate technology for defining and triggering a response to supply chain disruption.
The “Chain Reaction – Holistic Supplier Management is Key to Business Success” study, conducted by Forrester Consulting and commissioned by Ivalua, outlines strategies being followed by organizations to minimize the frequency and impact of supply disruptions. Over half (56%) of organizations have implemented automated risk monitoring to notify them of disruption, while 54% have increased inventory levels. A further 46% have turned to on / nearshoring, while 44% negotiated preferred supplier access to key goods.
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“In an age when Black Swan events are becoming more commonplace, collaborating with your suppliers has never been more critical,” comments Alex Saric, smart procurement expert at Ivalua. “Procurement teams are tasked with minimizing the impact of supply chain disruptions, but all too often they’re unable to do so because of a lack of visibility into direct and sub-tier suppliers and an inability to collaborate efficiently and at scale. More needs to be done to digitalize procurement to unlock the power of supplier collaboration and ensure supply chain resilience.”
ESG a priority but inadequate technology impedes sustainability gains
According to the study, 71% of organizations say that supply chain sustainability has increased in priority since the pandemic began. As such, organizations have incorporated sustainability in procurement KPIs and have begun setting minimum sustainability thresholds for suppliers to achieve.
While organizations are prioritizing ESG initiatives such as recycling materials, reducing their carbon footprint and supporting diverse businesses, many are facing barriers to success. More than four-in-ten organizations (43%) are lacking systems that enable efficient collaboration with suppliers to improve sustainability, 41% lack the ability to measure progress on ESG goals and 40% are unable to engage sub-tier suppliers.
Organizations turning to suppliers to drive innovation
The study also shows respondents believe the most significant opportunity to increase organizational value through better collaboration with suppliers is in improving product innovation, with 70% of respondents ranking it highly. However, this is being hindered by an inability to assess supplier capabilities, a lack of supplier willingness to share innovations, and a lack of systems to enable collaboration with suppliers.
To overcome these barriers, organizations are looking to incorporate product / service innovation into procurement KPIs (57%), give suppliers more flexibility in how they meet requirements (56%) and reduce the pressure on cost savings (52%). Almost six-in-ten (58%) of organizations are also looking to implement systems that allow them to collaborate with suppliers on product innovations.
“A lack of collaboration has become a running theme for organizations, which is impeding them from realizing greater value from suppliers – whether it’s driving innovation, achieving sustainability goals or improving supply chain resilience,” added Saric. “A smarter, more holistic approach to procurement and supplier management is needed. By digitalizing procurement processes, organizations can effectively discover, assess, engage, and monitor suppliers, enabling them to measure progress against key business priorities such as supply continuity, ESG performance and innovation.”
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