With
change comes risk. This is the phenomenon that contemporary executives and
supply chain practitioners need to deal with on a day-to-day basis. While the
risk of supplier failure has always been the major concern, supply chains have
recently been confronted with an increasingly volatile global economy. This is
placing a firm focus on supply chain performance, and on how supply chain
supports the fulfillment of an organisation’s strategical goals. Furthermore,
as supply chains become complex, the spotlight changes from a risk focus to
resilience.
Current trends
In a recent article, Boris Felgendreher (writing for supply magazine)
identified the emerging trends that are reflecting a growing concern for the
supply chain practitioner. These include:
1. A greater need for collaboration in the supply chain;
2. A greater emphasis on responsibility, accountability and traceability;
3. A concerted focus on sustainability;
4. An ability to accommodate acceleration in the supply chain;
5. Awareness of the enhancing capability of digitalisation;
6. The use of big data for market intelligence; and
7. A sound ability to identify potential supply chain disruptions.
It is evident that with heightened focus on supply chain performance,
executives are constantly concerned with the vulnerabilities inside said supply
chain. The 2016 supply chain focus report places emphasis on “the ability to
use technology effectively to convert big data and information into actionable
intelligence” as a source of supply chain resilience. The report further
reflects the growing concern for supply chain practitioners by acknowledging
that we exist in a fundamentally changing world, and cautions against the
desire to “change for the sake of change”, arguing that this is “unjustifiable
if it is not well-researched, understood, designed and implemented to achieve
specific and identified objectives and targets”.
Challenges
As supply chain practitioners in general, and procurement specialists in
particular, one major concern is how to create a high performing supply chain
in light of the trends identified above. Furthermore, we must carefully
consider how market intelligence is gathered and used effectively to create
robust contracts and service levels agreements that allow for rapid reaction by
the supply base without fundamentally affecting the level of service. There are
further key questions (or concerns) around the mediating role of third-party
service providers. What is (or should) be the extent of collaboration in light
of the identified risks with third party service providers? And are there
opportunities to leverage these relationships?
Opportunities
Despite the concerns, in my opinion, it is not all doom and gloom. The changing
supply chain environment presents real opportunities that entities can
capitalise on. The obvious one is the adoption of appropriate technology to
drive innovation and using big data to create “actionable intelligence” for use
in identifying, classifying risks and determining relevant mitigation and
contingency strategies.
The second one is the acknowledgement of the role and impact of the “social
enterprise” – especially with regard to amplified awareness of disruptions and
implications for the brand. In South Africa recently, the debacle around
listeriosis bears testimony to this. Therefore, social media provides platforms
for “getting in-front of the issue” (risk, disruption, disaster etc) and
shaping the narrative and public discourse. This requires both internal
collaboration and external supply chain collaboration.
Thirdly, the sustainability drive creates further opportunities for supply
chain visibility, not only in terms of volume, space and time, but also product
characteristics to enhance traceability.
A fourth opportunity resides in how the supply chain is at the forefront of
facilitating compliance with many of the legislative imperatives being imposed
on business. These include actively creating and supporting opportunities for
entrepreneurship through growth of small to medium enterprises (SMMEs) through
enterprise and supplier development (ESD) programmes, among others. It is my
opinion that if ESDs are well considered and well implemented, they tend to be
very successful and can sidestep certain risks of non-compliance.
The last opportunity resides in the continued motivation for the elevation of
the supply chain function to a C-suite level. Given the vulnerabilities
identified already and the impact on business performance, it is clear that the
majority of the supply chain concerns are of a highly strategic nature. They
need to be deliberated and robustly engaged at the executive level. All the
four opportunities identified here can find traction if driven from the
executive level.
Contributed by: Ozias Ncube, a senior lecturer in supply
chain management at the Graduate School of Business Leadership (SBL),
University of South Africa (UNISA).
Article first appeared in: 
http://www.bespoke.co.za/index.php/articles/293144-supply-chain-risks-current-trends-challenges-and-opportunities
