The COVID-19 pandemic and the Suez Canal saga have illustrated the need for supply chains to be resilient, agile, collaborative and visible
While respondents said they prioritize spend analytics and have a strategy to optimize costs, 63% lack the data, platforms and technology needed to make critical cost-saving decisions
As regulations increasingly underline third-party risk management and sustainability, firms must assume higher accountability not only for their own actions, but also for their suppliers’
The reluctance to invest in third-party risk and ESG could easily wipe out a firm’s cost-optimization gains, as penalties for oversights or breaches can be severe
Amid the unprecedented challenges buffeting the fragile and complex international supply chain since last year, supply chain professionals often lack the tools, data, and platforms needed to diversify their supply chains and optimize their processes, a new IHS Markit survey showed.
“Supply chains can no longer operate as siloed, disconnected functions; recent events such as the COVID-19 pandemic and the Suez Canal saga, have illustrated the need for supply chains to be resilient and agile,” said Wilhelm Greyling, executive director of supply chain solutions at IHS Markit.
“Supply chains can only truly be optimized via end-to-end collaboration and visibility. As the old saying goes, you can’t manage what you can’t see; an integrated approach is not only a nice to have, it’s essential.”
Conducted earlier this year, the 2021 Supply Chain Insights Global Survey asked respondents to identify their priorities and capabilities in three key industry capabilities: strategy and process, platforms and technology and intelligence, and insight and expertise across nine functional elements.
Responses were compiled from 340 supply chain leaders across 60 countries and 33 industries.
The outcome showed that majority of the respondents (239) had spend analytics as their top priority, followed by category management (173), supply risk management (128), logistics (126), supplier performance (90), sourcing management (89), ESG (69), contract management (55), and supplier management (51).
While respondents noted prioritizing spend analytics and reported having a strategy in place to optimize costs, 63% lacked the necessary data, platforms and technology needed to make critical cost-saving decisions, IHS Markit found.
“The results represent a clear misalignment between strategic intent and capability and send a signal that significant investment is needed in technology, platforms and data to enable and deliver overall supply chain objectives.”
Surprisingly, supplier risk management and ESG (environmental, social, and governance) were among the least important priorities, at nine and seven, respectively. Only 51% of supply chain leaders surveyed reporting having a strategy in place to combat ESG issues.
This can have dire consequences for companies, said the global industry and market information, analytics and solutions provider.
“Increasing legislation and regulation will continue to drive the importance of third-party risk management and ESG considerations, as companies increasingly become accountable not only for their own actions, but also for that of their suppliers,” said Greyling.
“The reluctance in investment into the areas of third-party risk and ESG could easily wipe out a firm’s cost-optimization gains, as the penalties for oversights or breaches can be severe,” he warned.
The report said the survey results signaled that “one missing link can have drastic cost and reputational benefits” for companies in today’s world of complex supply chains.
“Successful supply chains of the future will need to balance precise cost optimization strategies with a proactive approach to risk management and ESG considerations,” it advised.