COVID-19: Supply chains at risk

August 13th, 2020
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Since the 2000s, the global economy has been boosted by the expansion and growing complexity of supply chains. With the COVID-19 pandemic ongoing, supply chains are now under threat, demonstrating the importance of putting supply chain risk management programmes in place.

The effects of COVID-19 on companies

In recent months, companies have faced unprecedented change. According to Ardent Partners' recent study, "Procurement Metrics that Matter in 2020", 98% of organisations say that they have been affected by the health crisis, with 60% of those experiencing a significant or even extreme impact. And this phenomenon is growing as the crisis continues.

The survey respondents agree on the main sources of risk:

  • 43% cite the supply chain and its disruptions
  • 28% refer to internal operations
  • 16% mention employees, especially with regard to the surge in remote working

The supply chain put under strain by COVID-19

One thing is certain: Companies were not prepared and/or equipped to cope with a crisis of this kind. It can be difficult to maintain clear visibility and keep supplier and third-party risks under control, even for companies that are considered mature in this respect and have dedicated risk management teams. However, these risks tend to have knock-on effects on factors such as time to market, customer relationships, sales and brand image.

According to Ardent Partners, there seems to be plenty of room for improvement in this area. Only 34% of companies have a supply chain risk management programme in place, 21% of which target strategic suppliers.

In times of uncertainty, procurement departments take action to overcome this challenge by creating value. Consequently, procurement decision makers are revising their priorities and coming to the conclusion that improving visibility across their supply chains must now be a key focus.

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