Procurement experts are ideally placed to identify supply chain risk and the potential business impact. Yet, a CIPS survey shows many could do more to protect their business
Outsourcing and multi-tiered global supply chains are growing, and with them operational and legislative risk. As procurement and supply management professionals increasingly provide a fully embedded, cross-departmental function, offering more consultation, this risk can be best managed within procurement.
While there is a growing awareness that an unexpected risk can wipe out cost savings many times over, procurement professionals are not fully utilising their unique oversight of the end-to-end supply chain, as a CIPS survey of over 900 procurement professionals revealed.
Supply chain resilience requires planning and designing the network to anticipate unexpected disruptive events and needs to be able to adapt, while maintaining control over the process, the outcome and any legal obligations. Emphasising sourcing and pre-contract risk assessment, it promotes a more pre-emptive approach than traditional risk management and business continuity.
Risk management and business continuity functions are key to the defence but, as the figures below show, many procurement professionals are not yet collaborating to manage risk. Only about half of those surveyed said they feel able to undertake a cost benefit analysis for costs associated with risk becoming an incident with their supply chain. And a similar number (47%) believe that asking for a business continuity plan is sufficient to understand risk, and yet almost 52% expect the same level of service from suppliers in the event of a disruption.
Establishing resilience across the supply chain can be broken down into four key activities: recognition; analysis; assessment and mitigation. It starts with understanding the opportunity for risk, the level of damage that would be done, and the likelihood of its occurrence. This indicates where the effort should be focused, complementing those of risk management and business continuity.
Setting up a business-wide process will not only protect the company, but will give procurement professionals the opportunity to increase their influence and contact with the board.
Supply chain Resilience
Survey results show more can be done
What makes a resilient supply chain?
64% believe risk management and business continuity are both involved
Can you measure the cost of disruption?
56% felt unable to conduct a cost benefit analysis of risk of incident amongst suppliers
Supplier business continuity plans
70% who ask suppliers for one, do so at pre-qualification stage
Post award checks
41% do not monitor, don’t know or have not considered recovery strategies after awarding a contract