The Challenges with Legacy Supply Chain Management
The global market leader in supply chain risk management, risk methods, recently surveyed 250 senior procurement executives to find out the changing costs, risks, and the evolving role of procurement in today’s supply chains. Focused on discovering how procurement teams balance cost savings and risk management to drive growth, the survey paved a way for businesses to better understand the role of procurement in the modern business landscape. The survey data highlights the hurdles to prioritize cost savings, and risk tolerance to protect businesses and drive innovation. In the words of Bill DeMartino, General Manager of risk methods, North America, “Today’s procurement leadership is growing, as is the role of procurement leaders.”
( CIO's Viewpoint: AGCO Smart Logistics - Supply chain transformation around the world )
70 percent of all the respondents in the survey chose to be more strategic and act preventively, meaning that procurement executives are more inclined toward strategic management of their supply chains. 49 percent of them reported having no structured assessment when asked about having a mechanism for measuring supplier impact. These factors point out that reactive supply chain management has become obsolete and results in instability in business functions.
44 percent of the respondents conducted qualitative assessments for measuring the substitutability and other factors that impacted the criticality of suppliers. Further 58 percent of them pointed out that solving conflicts of their objectives for minimizing risk and generating savings is either unsolved or unclear. The survey helped risk methods figure out that procurement is operating with fluctuating goals with higher risks and cost savings at priority. Although reactive supply chain management has its perks, in today’s evolving industry, it has become obsolete for businesses in avoiding major disruptions.
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By Jesse Laver, Vice President Global Sector Development, Technology, DHL Supply Chain