How to minimise the impact of black swan events

19 May 2022

Growing numbers of black swan supply chain disruptions have heightened the need for collaboration across supply chains, according to a report. 

Two-thirds (66%) of businesses believe better collaboration with suppliers was needed to increase supply chain resilience, said the report by software company Ivalua, in collaboration with consulting group Forrester.

A lack of collaboration between procurement teams and suppliers, as well as an inability to assess risk and inadequate technology, are acting as “key barriers” to minimising the impact of disruptions caused by Covid-19 and Russia’s war in Ukraine. 

Alex Saric, chief marketing officer at Ivalua, said: “In an age when black swan events are becoming more commonplace, collaborating with your suppliers has never been more critical.

“Procurement teams are tasked with minimising 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 digitalise procurement to unlock the power of supplier collaboration and ensure supply chain resilience.”

Saric said a lack of collaboration has become “a running theme” for organisations, and is preventing progress in innovation and sustainability goals.

More than four-in-10 organisations (43%) lacked the systems to enable efficient collaboration with suppliers on sustainability, found the survey, involving 462 leaders across North America, Europe, and Asia Pacific. 

A further 41% lacked the ability to measure progress on ESG goals and a further 40% were unable to engage sub-tier suppliers.

Supply disruptions have caused a shift in the structures of global supply chains, with increases in nearshoring and stockpiling supplies reported.

Just over half (54%) of businesses said they had increased inventory levels, while 46% had nearshored their supply chains, and 44% negotiated preferred supplier access to key goods.

The report noted: “Just-in-time, supply chains and cost-dominated sourcing have rapidly been replaced or at least adapted. The future of supply chains will be characterised by a dynamic outside-in approach to analysis and collaboration.”

Saric said a “smarter, more holistic approach” to procurement and supplier management is needed.

He argued: “By digitalising procurement processes, organisations 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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