Supply chain complexity and disruptions are becoming more challenging for industry leaders. The covid restrictions are almost over, But supply chains remain fragile, trade wars, conflicts, political influences, and cybersecurity are causing severe disturbances. Supply chain officers (CSOs) can turn massive complexity disruption into meaningful change by taking the right actions.
“There are many types of macro supply chain disruptions, including natural disasters, trade wars, political unrest, cybersecurity breaches, and other events,” said Chris Poole, Practice VP with the Gartner Supply Chain practice. “In addition to managing those macro disruptions, CSCOs must also pay close attention to micro disruptions, such as new entrants to the market, emerging technologies and internal organizational changes.”
Gartner has suggested the following three actions for CSCOs to be prepared for upcoming macro and micro risk events.
1. Understand the Organization’s Risk Appetite & Areas of Exposure
Risk appetite refers to the amount of risk a company intentionally takes to achieve its strategic objectives. The risk appetite statement defines the types and numbers of acceptable risks to the organization and provides performance boundaries for the strategic objectives. A 2022 Gartner survey among 273 board members found that 57% are increasing their risk appetite, even during disruptive times.’
“It’s crucial for CSCOs to understand where their company is deliberately increasing risk, so they can manage those additional risks in line with other disruptions. Risk management has never been more important,” Poole said.
2. Accelerate Digital Transformation Efforts
Digital transformation can also help mitigate supply chain disruptions as new technologies improve the agility of the supply chain – the ability to sense and respond quickly to unanticipated changes in demand and supply. Digital transformation can also improve the resiliency of the supply chain, as it gives the CSCO the ability to quickly adapt to structural changes by modifying strategies, products, and technologies. CSCOs should evaluate which frameworks, capabilities, and technologies are best suited to progress their supply chain maturity so that risks can be prioritized, planned for, and controlled more effectively.
3. Extend the Partner Ecosystem
Lastly, building a digital ecosystem that connects an organization’s supply chain with its partners, customers, manufacturing sites, vehicles, other machines, and nodes is critical to extending visibility to sense disruption.
“The greater the ecosystem, the greater the reach to sense changes and increase options for a path forward,” Poole concluded.