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Supply chain risks: Current trends, challenges and opportunities

06 June 2018

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).

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