Wake up to supply risk!

Converging trends will make supply relationships even riskier in 2020 than they are today. Project participants expect to see big increases in companies’ awareness around supply risk and also an expansion in their perceptions of where risks lurk.  This is the consensus among Procurement Executives who responded to an Ariba survey on Procurement in 2020.

“We are going to see a big awakening around supply risk in the coming decade,” says former DuPont, Chrysler and The Home Depot CPO John Campi. “Today, when supply management organizations are challenged on risks in their supply chains, they generally look at suppliers’ financial stability, which is only one element and not a very significant one compared with continuity of supply.

“What is more, many companies treat all suppliers on equal footing, which is unacceptable from a risk point of view. Some suppliers are truly critical to the continuity of your business, while most are not. Those critical suppliers need to be treated very differently.”

Dr Heinz Schaeffer, Chief Procurement Officer, Northern and Central Eastern Europe for AXA, agrees that there will be a big expansion in the kinds of risks companies address in their supply chains, considering, for example, such things as suppliers’ sustainability, social responsibility, physical and information security practices, to name just a few.

A particular challenge, according to Schaeffer, will be for supply management to transition from generic to more dedicated and customizable risk management approaches, depending on spend category, region of the world, and so forth.

Meanwhile, KeyBank Chief Procurement Officer Jean-Jacques Beaussart suggests that, “Complexity is a risk that most companies will be addressing in 2020. They will need to be agile and they will be looking to transition away from very complex and inconsistent processes to processes that are simpler and more easily controlled.

“I do believe that in 10 years, or even before that, we will have simplified our processes for managing supplier relationships and that simplicity will enable us to have KPIs or metrics that measure our success in very efficient ways.”

The information in this article was sourced from the report ‘VISION 2020 Ideas for Procurement in 2020 by Industry-Leading Procurement Executives’.

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