Historically, procurement and supply chain teams have managed supply disruption in a largely reactive way. A disruptive event or crisis happens, the team analyses its impact, then they take corrective action that helps them restore stable supply at the right price – or as close to it as possible.
While not optimal, that approach is fine – as long as those teams have the time, resources, and insights required to respond to disruption and restore optimal supply quickly. But what happens when multiple crises happen at the same time?
Today, we’re experiencing one of the most disrupted and volatile supply landscapes ever seen. Between the Russia-Ukraine war, climate change, global labour and shipping shortages, and the long-tail impacts of the pandemic, there’s an immense amount for procurement teams to consider.
When there’s that much happening – and new disruptive forces emerging every day – a reactive approach to risk management quickly becomes unfit for purpose. It creates a constant cycle of firefighting, where teams spend all their time tackling the immediate impacts of each crisis, rather than making long-term improvements that could protect them against future disruption.
They can’t simply wait to be disrupted anymore. Teams need to establish a proactive and ongoing approach to supplier, category and overall supply chain risk management.
We can’t always predict disruptive events, but we can detect and respond to them earlier
Proactive supply chain risk management doesn’t mean predicting when and where the next crisis will happen – nobody can do that. But what we can do is detect disruptions at the local level before they go global, or before they impact supply of a particular commodity.
Take the COVID-19 pandemic, for example. Before it emerged, nobody could have predicted it. But if teams dug deeper into local signals when it began to spread in China and modelled its potential impacts, they could have made changes to their supply chains and supplier portfolios before their own operations were threatened.
Proactive supply chain risk management isn’t just about detecting and responding to early crisis signals. It’s also important to consider how today’s biggest disruptors could evolve and cause further disruptive events that can become crises in their own right.
When the pandemic was at its peak, millions of procurement and supply chain professionals understandably focused their attention on the short-term logistics and sourcing challenges it created. That left them unable to properly consider all the long-term economic impacts, and how those might further disrupt their business.
We’re now in the middle of that economic disruption. And teams across the globe are wishing they’d had the time and capacity to properly model, forecast, and mitigate the impacts proactively.
Seeing a crisis coming is just the beginning
Interpreting signals and identifying emerging supply risks is a good start, but it’s only half the battle. To proactively mitigate supply risk, you must also be able to contextualise risk signals to understand which have the greatest potential to disrupt your operations – and how that might happen.
There are vast quantities of data and content relating to emerging risks available today. If teams try to wade through all of it and build proactive strategies for every potential threat, they’ll end up just as overstretched as they were when their operations were completely reactive.
Contextualising risk signals for your business allows you to focus your efforts where they’re needed most. If procurement and supply chain risk teams have a clear picture of each risk’s potential impact intensity, they can quickly see which emerging disruptive forces demand their immediate attention.
How The Smart Cube is supporting teams through unprecedented supply disruption
The Smart Cube has helped procurement and supply chain teams identify, mitigate, and navigate risk for many years. As the risk landscape has grown more complex, our solutions have helped teams stay ahead of rapidly emerging threats across their global operations.
Our supply chain risk experts help organisations around the world:
- Identify potential supply risks as soon as they emerge so that teams can take proactive steps to mitigate their disruptive impacts
- Examine each risk in detail and deliver customised reports and contextualised insights that clearly lay out how each one could impact the business
- Model scenarios to visualise the knock-on impacts of disruptive events, and help leaders make long-term decisions to strengthen their supply chain and procurement strategy
- Confidently secure supplies and contracts even in times of intense disruption, by empowering teams with a clear view of trends
- Continuously monitor key categories and suppliers for high-impact risks to ensure they’re detected and mitigated at the earliest opportunity
Together, these strategies form the foundation of a robust, future-ready supply chain risk management strategy. By combining continuous risk monitoring with contextualised impact assessment and scenario modelling, we help teams make sense of today’s highly disrupted supply chain landscape and commodity markets.
By making it easy to see which risks pose the greatest threat to their supply chain and their business, we empower procurement and supply chain leaders to do what they do best – devise resilient, high-value category strategies.
Contact us today to find out how we can help your procurement teams thrive amid intense market and geopolitical disruptions