The interconnected nature of our daily lives, from the way we work to the way we keep in touch with the world around us, is changing all the time. It’s bringing incredible benefits and convenience, but it’s also getting more advanced and complex. The same is true of modern supply chains, whose interconnectivity brings enormous benefits but relies on seamless coordination that can be threatened by any number of factors, from human error to severe weather. Direct procurement risk management can help anticipate potential disruptions and avoid issues that would otherwise derail operations.
Supply Chain Threats Can Originate from External and Internal Risks
These often complex, interdependent networks are responsible for how the world gets what it needs. This makes them one of the most critical elements of global commerce, but their ever-increasing complexity also makes them vulnerable to all kinds of disruption. Natural disasters, geopolitical crises, pandemics, transportation delays, and a host of other external factors can happen at any time and wreak havoc on even the most sophisticated and carefully planned supply chains. Even with all of these variables, in our experience, as much as 70% of inbound supply chain issues happen prior to shipment.
Taken together, there are countless external and internal factors that all need to go right in order for the supply chains to run smoothly. SourceDay defines PO Risk as any issue that puts an order at risk of not being delivered on time, in full, and for the agreed-upon price. The definition is broad, and the opportunity for problems to arise is high.
Conquer the Risks You Can Control and Manage Those You Can’t
Worrying about risk isn’t the same as planning for it. Organizations are at the mercy of supply chain risks, and the disruptions can range from minor irritants to massive delays and loss of revenue. Purchasing groups are well-versed in the losses in time and resources that come with managing archaic and error-prone manual processes or chasing down PO changes. They are also juggling this while running an unrelenting race against all of these factors, any of which may bring business to a halt.
The antidote to worry is preparation, and direct procurement risk management is the silver bullet. The key to a resilient supply chain is adding as much visibility as possible into your process. Without this, planning for potential disruptions is a guessing game. Fortunately, there are very effective tools that organizations can use to mitigate risks and find best practice ways to manage around those you can’t. Autonomous, real-time visibility makes it possible to identify potential points of failure, evaluate supplier performance, and manage risks—seen and unseen. We’re not talking about relying on technology for survival but harnessing it to transform supply chains into competitive advantages.
The rapid proliferation of artificial intelligence (AI) and machine learning (ML) presents an enormous opportunity for purchasing teams. With advanced data analytics and algorithms, AI/ML technology can detect and predict risks, and even make tailored recommendations for action.
The Devil is in the Data: AI/ML Harness the Power of Data to Deliver Actionable Insights
For more than a decade, SourceDay has had a front-row seat to the evolution of supply chain management. This expertise, along with the knowledge and insight from managing nearly $60 billion in direct materials spend, has catalyzed a new era in intelligent supply risk mitigation. SourceDay Intelligence is an ML platform explicitly designed to make a real impact on the daily work of purchasing teams through risk modeling, trend identification, and pattern matching. All of this is driven by the most comprehensive dataset in the world.
Disruptions are inevitable. This is just one more ongoing reality that companies need to plan for. They can be big or small, but that’s almost secondary to how they are managed. By integrating technology solutions that offer automation, data accuracy, and collaboration, organizations can build resilient supply chains, make teams more efficient, and improve worker and customer satisfaction.
Coming Next in our series on Key Supply Chain Success Factors – Part 2: Cost Management
