There’s a business case to be made for adopting and implementing supply risk management (SRM) tools, as well as supplier performance management (SPM) and supplier information management (SIM) tools. Part of that case likely includes a business’s existing vulnerabilities vis-a-vis supply risk, as well as the visibility that procurement teams can gain by adopting these and other solutions. And with greater visibility comes fairer warning, greater control, and more agility in managing, minimizing, or ideally avoiding risks within suppliers or markets. But first, here are some numbers to put the state of supply risk management in 2018 for perspective.
Supply Risk Management: by the Numbers
In early 2018, Ardent Partners conducted a web-based survey of 324 Chief Procurement Officers (CPOs) and other procurement executives, and found that:
- Only 18.3% of respondents considered managing supply risk a top business pressure facing their procurement organization in 2018.
- Likewise, just 23.1% of respondents considered improving collaboration with suppliers a top strategy that they have used or will use to drive procurement initiative and improve performance.
- And less than a third (29.7%) of respondents considered improving supplier performance and mitigating risk a top two-to-three year objective.
Now, these numbers are what they are; they are neither good nor bad. But they suggest that even though the world is a dark and scary place and there are a lot of risks and dangers that can disrupt supply chains and operations, managing supply risk is not top of mind for CPOs, nor is improving supplier collaboration to improve their performance and mitigate risks a top strategy or near-term objective.
Technology adoption numbers aren’t much better. That same survey found that:
- just 44% of CPOs surveyed have deployed a digital or automated SPM system, while
- just 37% of them have a digital SIM solution, and
- only 35% have a digital, automated SRM system in place.
These numbers lag most other technology adoption levels (for perspective, 64% of all organizations reportedly employ an eProcurement tool). When broken down by maturity class, Best-in-Class procurement teams lead the way on supplier management systems, including supply risk management; but let’s hold the applause, at least for now.
- Nearly half (48%) of all Best-in-Class teams have a digital SPM solution, while
- 44% have a digital SIM solution, and
- only 39% of Best-in-Class procurement teams have a digital, automated SRM solution.
Clearly, there’s significant white space here for even the Best-in-Class to really step up their supply risk management game and take it to the next level — with good reason. The data shows that even modest adoption of supplier management solutions, like SPM and SRM solutions, can correlate with significantly more visibility into performance and risk. Fifty-three percent (53%) of Best-in-Class procurement teams reported having visibility into supplier performance and risk compared to just 31% of All Other procurement teams that consistently struggle with technology adoption — a 52% difference.
Final Thoughts
As we grapple with decidedly low adoption levels for traditional supply risk management solutions, we ought to consider how enterprise procurement teams can boost their adoption levels moving into 2019. We should also ask if there are more accessible business technologies out there that can help bring supply risk management not only to a broader array of procurement practitioners, but also bring them into the future.
Stay tuned for an overview of the new and innovative technologies on the market today that as they integrate with each other, will take us toward a new and “intelligent” supply risk management paradigm.
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