- Developing a "risk management architecture" is critical to surviving economic disruption and other risks to the supply chain, industry leaders and analysts agreed on Jaggaer's Monday webinar on procurement risk management.
- A comprehensive risk management system includes risk analytics, a channel to receive risk intelligence, and a platform for client and partner interaction to collectively produce risk solutions. Systems are further advanced through information aggregation and analytics techniques integrated into risk management systems through CPU power, and AI and machine learning algorithms.
- Over a third of participants on the webinar stated that their company didn’t have any formal risk management plan in place, although supply chain was considered a major focus during the pandemic. Only 11% reported having a strategic plan across all supply bases.
In order to successfully prepare for and mitigate procurement risks, there has to be investment in creating a comprehensive risk management plan that incorporates data, builds sustainability and fosters communication and partnership between all stakeholders. Standing up this type of environment will enable companies to survive the pandemic and effectively move forward.
The webinar panelists at Jaggaer's "Do You Have a 360° View of Your Suppliers?" were experts involved in strategically shoring up the procurement process from Spend Matters, EcoVadis and riskmethods.
"Procurement needs to align the various stakeholders who own the risk or impact the risk across various processes," said Magnus Bergfors, VP of European Research and lead analyst at Spend Matters. Product development, sales and marketing, supply chain and extended network design for sourcing, purchase to pay and supplier management were departments listed for alignment.
Companies have to see which suppliers were impacted by the pandemic and quickly switch to ones that are still flowing to be successful. The companies that were capable of a faster switch because of their planning, data abilities and supplier diversification, beat out their competitors, according to Heiko Schwarz, the founder and managing director of riskmethods. That visibility was possible through a risk management system. When platforms are established and data is integrated into the operating process, companies can protect their bottom line without much disruption — surviving uncertain times while others fail.
Sustainability and other social issues have a role to play in risk planning also. Companies must focus on their own company's management, as well as their partners, to ensure that disruptions won't arise from bad press, public outcry or other potential misgivings. EcoVadis Chief Marketing Officer Emily Rakowski encouraged leaders to assess suppliers with a scorecard of strengths and opportunities to keep a pulse on conditions and any improvement needs.
A full risk management plan includes "strategy, product development, sales and marketing, supply chain design, extended network design (through strategic sourcing), tactical sourcing, P2P and supplier management," as stated in the webinar slide deck.
This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.