ProcureAbility: Are Legacy Systems Blind to Disruption?
Traditional third-party risk management is breaking down. As supplier complexity grows, cost pressures mount and regulatory scrutiny intensifies, the systems procurement functions have relied on are proving to be unfit for the disruptions of today's landscape.
A report from ProcureAbility, a Jabil company, and The Hackett Group titled “From Insight to Impact: Analytics-Led Third-Party Risk Performance Management” reveals that just 7% of organisations have mature systems capable of modelling future disruption scenarios, leaving the vast majority in a permanent state of reaction.
The question is no longer whether legacy approaches are failing, but what replaces them. ProcureAbility's answer is the TPRM 3D Model: a unified framework integrating strategy, governance and analytics.
Incomplete systems
Most procurement organisations have only the foundations for TPRM, without the tools and processes needed to successfully deploy the programme. The data shows this: with 75% of procurement functions not implementing advanced risk programs, primarily due to gaps in data and analytics.
62% report that a mature supply risk management approach is only partially deployed within their function, held back by limited development of practices, processes or systems. A further 13% have no formal approach to supply risk management at all.
The disconnect between monitoring and action is clear. While 90% of organisations track supplier risks – financial, location-based and others – only 7% are modelling future disruption scenarios.
The result is a procurement function stuck in a constant state of reacting rather than predicting. And a reactive stance has real consequences. 68% of procurement organisations cite supply chain disruptions – geopolitical tensions, trade policy shifts and chokepoint disruptions – as the top challenge to breaking out of a constant state of "permacrisis."
The organisations that are ahead are those treating risk management and analytics as a single, integrated capability, converting supplier signals into faster, better commercial decisions.
What does successful TPRM look like?
According to the report, a successful TPRM system is enabled by three interconnected dimensions – strategic intent, program and governance and data and analytics. Known as the TPRM 3D Model.
"Procurement leaders pulling ahead are replacing fragmented management of risk, cost and performance with a unified operating model that integrates strategy, governance and analytics," says Darshan Deshmukh, President of ProcureAbility.
Those who integrate all three dimensions reduce the cost of supply disruption, improve supplier performance without adding oversight headcount and convert risk data into sourcing decisions that can hold under pressure.
With this 3D Model approach to TPRM, organisations can convert supplier signals into structured decisions, resulting in the ability to intervene before disruption happens rather than after.
