As the frequency and magnitude of supply chain disruptions increase, chief supply chain officers (CSCOs) can take three actions to navigate ongoing disruption on both the macro and micro level.
“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 organisational changes.”
Gartner suggests three actions for CSCOs to be prepared for upcoming macro and micro risk events.
Understand the organisation’s risk appetite & areas of exposure
Risk appetite refers to the amount of risk a company is intentionally taking to achieve their strategic objectives. The risk appetite statement defines the types and numbers of risks that are acceptable to the organisation 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.
Accelerate digital transformation efforts
Digital transformation can also help mitigate disruption, 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.
Extend the partner ecosystem
Gartner says it is critical to build a digital ecosystem that connects an organisation’s supply chain with its partners, customers, manufacturing sites, vehicles and other machines, and other nodes to extend visibility to sense disruption.
“The greater the ecosystem, the greater the reach to sense changes and increase options for a path forward,” Poole concluded.
