For procurement leaders at industrial companies, the past 18 months have been difficult. Resurgent economic activity has collided with supply disruptions that have seemingly come one after another. Procurement executives know they need to respond but are unsure how. Most of them have not had a chance to anticipate the next set of problems—let alone to quantify them. What procurement departments need is a comprehensive view of their supply chain vulnerabilities, organized around their companies’ product lines. With this view in hand, they can secure the products that are most at risk. This article describes a holistic approach that companies can use to safeguard their sources of supply and make their organizations resilient. The approach focuses on three potential problems that every industrial company now faces in one way or another: absolute-shortage risk, supplier risk, and inflation risk. The first supply chain risk is the unavailability of products that are essential for a business to operate. While a mid- and long-term view of commodities—copper, steel, and cement—is usually relatively straightforward, analysis becomes more complex for more processed products with longer supply chains. Those products use a combination of intermediate and raw materials. A greater number of inputs means more chances for structural shortages that could affect availability.
Full report : Procurement, early warning systems, and the next disruption.
