CPO Crunch: The 1% Club

David Rae

Achieving resilience is about much more than supply chain visibility

Just 1% of respondents to a poll Procurement Leaders conducted at the World Procurement Congress said they have “excellent” multi-tier visibility of the supply base.
This is surprising. Not because 1% represents such a modest number, but because 1% is actually rather encouraging. In real terms, this translates to three of those who responded to our poll claiming they had “cracked the code” of supply chain transparency.

The remainder of the data was more as one might expect – 57% said that multi-tier supplier visibility was “getting better in some categories” while 14% said it was “good” and that they had “invested well”. Which leaves 28% of those who responded admitting that the visibility they have is “not great” and, at best, goes as far as Tier-1.

This is one of those Holy Grail quests for CPOs and the technology and data providers that serve the procurement function – tracing individual supply chains back to the source is time-consuming and expensive.

Most organisations would be wise to conduct a thoughtful segmentation exercise to dictate where they start, aiming for categories that have a high revenue and profit impact. Even then, gaining visibility through the tiers is notoriously challenging.

Even if an organisation does gain that visibility, building resilience goes far beyond having an accurate picture of who they do business with. Visibility is only the raw material, the platform on which to build resilience-based strategies.

A recent call with Procurement Leaders’ Risk and Sustainability Strategy Cohort provided a good example of the type of work required to build resiliency in supply chains. The story shared was related to the sourcing of semiconductors in the aftermath of Covid, when scarcity was the hallmark of global trade.

With huge competition, and incumbents in the automotive and industrial sectors enjoying the benefits of much greater scale than the subject of our example, alternative levers had to be used.

This included connecting end-to-end with customers to prioritise key areas of their operations to supply first; working on alternative materials and designs; shaping the value chain to drive greater influence and leverage and working hard to share long-term forecasts with the supply base to improve planning.

In short, achieving supply resilience demands a holistic, cross-enterprise approach combined with supply chain transparency to get right. Because of that, remaining laser-focused is priority number one.

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