Two-Thirds of Organizations Say Reducing Supply Chain Disruption Has Increased in Priority in Response to Recurring Black-Swan Events

Research from Ivalua, a leading global spend management cloud provider, has revealed that almost two-thirds (64%) of surveyed procurement decision-makers say their organizations ensuring supply continuity has increased in priority since the pandemic, with another two-thirds stating that they now collaborate more closely with suppliers to increase supply chain resilience. Yet despite 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, highlights that key challenges remain for organizations aiming to ensure supply continuity, with 30% of respondents saying they suffer from an inability to effectively assess the overall risk across suppliers. In addition, 26% of respondents agree their organizations lack adequate systems for defining and triggering a response to supply chain disruption, while a quarter (25%) have an inability to effectively assess the risk of individual suppliers.

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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. 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.

“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.”

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The study 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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