In our Expert Insights Series, we ask supply chain thought leaders to weigh in on key topics. This time, we talk about risks.
Never has the issue of supply chain management been so prominent. In the last few years supply chains have been battered by one shock after the other. These have truly been some of the most volatile and challenging times for supply chains across continents.
Major disruptions have caused significant shifts in both demand and supply, caused by a number of factors including fluctuating exchange rates, labor constraints, social and political unrest, natural disasters, and many more. In a world where everything is highly interconnected and business is increasingly globalized, we know that changes and disruptions will continue to accelerate.
Supply chain leaders have been forced to react to handle all the complexity and respond to market changes. Simply put, many were caught off-guard. At the same time, they’re striving to accelerate planning decisions while balancing opportunity and risk. The focus is on developing a highly effective management strategy for mitigating risk and increasing agility to withstand the challenges.
We asked industry experts to share their views on what the next big risk(s) will be and what supply chain leaders should prioritize. Here are their thoughts:
“1. The biggest risk that Supply Chain Leaders face is understanding customer and product profitability down to an individual level. Most Supply Chains ‘leak’ these profits through 7-12% of their customer orders, consistently. Savvy Supply Chain Leaders, the top 20%, know how to identify and plug those gaps.
2. Inventory, Inventory, Inventory. Too many organizations still lack effective Sales and Operations Planning processes, and so carry the wrong inventory balance, experience wastage and worst; lose sales.”
“The biggest risk supply chain leaders will face is that the various shocks we are seeing – COVID, Ukraine, container shortages, etc. – normalize and things settle down. I say this, because the unprecedented concurrence of shocks of this scale has finally gotten leaders getting serious about effective risk management and business continuity planning strategies. But what history has shown us, is it doesn’t take much for those leaders to forget the lessons and go back to business as usual. Obviously, we want to move past these disruptions, but the risk is that we move on and forget them, rather than remaining focused, as many are now, on preparing our enterprises for the next inevitable wave of supply chain challenges.”
“Leaders are facing many issues from global shortages, to increasing supply chain complexity and sluggish supply chain digitalization journey, and most important, they want to focus on developing their team but don’t have the platform or budget to do so.”
“The impact of geopolitical, economical, and other mega forces will not be going away. It would be a risk to assume that these pressures, along with other unknown quantum will not have an impact on Supply Chain. Normal is not coming back, no matter how much we want it to. Therefore, it is imperative that Supply Chain leaders plan, invest and transform their businesses by all means necessary to implement visibility, agility, and resilience into their models.”
Philip Auinger, Career Mentor for Supply Chainers at Career Companion e.U.
“The biggest risk I see is that supply chain leaders are so focused on putting out fires and figuring out resilient supply chain designs that they forget to watch out for their talents.
On the one hand, keeping the people they already have on board motivated and appreciated. This could be through benefits and paid trainings/coaching, but also by offering attractive career paths for them to grow into.
On the other hand, looking at talent acquisition. Being an attractive employer means something different nowadays than it did before the pandemic, for example working flexibly in terms of time and place.
The leaders who understand the importance of people in supply chain are the ones who will see ongoing positive results, rather than attrition and people filling spots then not meeting expectations.”
“I worry that leadership will move on and past the COVID crisis too quickly without asking for reconfiguration and re-design of the current supply chain. COVID proved that most supply chains have not been designed in a risk-adverse way. It has been my hope that the best outcome of the pandemic is that supply chains get an extreme makeover for risk and resilience. I worry that the expense, and stakeholder pressure for top line or bottom line will push the learnings from COVID to the side - and we will reset only a small fraction better than we were prior.”
"Geopolitics is the largest threat to Supply Chain leaders in 2023, as the US-China trade war and Russia-Ukraine war continues to put restrictions on essential goods and services, leaders have been forced to adjust their procurement and fulfilment strategies to become more resilient and agile. Leaders will continue to have logistical issues as the geopolitical landscape becomes more turbulent and the effects will trickle down to the consumer as the cost of goods continues to rise."
Stay tuned for more in our Expert Insights Series! As we share views and opinions from thought leaders and industry peers on key topics of the ever-evolving supply chain landscape.
