Gartner: Supply Disruption the Top Threat to Procurement

Supply disruption is the top threat to procurement's future success, according to research from leading analyst Gartner.

The survey of 258 sourcing and procurement leaders was conducted to help CPOs understand and prioritise the most significant risks which could impede procurement operations and what actions can be taken to help manage them effectively.

Unpredictable nature and potentially existential impacts

"CPOs' concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," says Andrea Greenwald, Senior Director Analyst in Gartner's Supply Chain practice.

"They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.

"The necessity of establishing a strategic supplier risk management programme has never been more critical, as companies that neglect to develop such a program now will struggle significantly when the next crisis arises."

Top risks to procurement's future success

Around two in five (42%) of the procurement leaders surveyed by Gartner identified supply disruptions, such as natural disasters and transportation issues, as the foremost risk to procurement success.

This arises from the unpredictability and velocity of such disruptions as well as the magnitude of their impact.

Macroeconomic factors, which include economic downturns, inflation and other economic factors, rank as the second most significant risk. These factors, while more predictable, can substantially influence long-term procurement strategies.

Geopolitical issues, including tariffs and regulatory changes and compliance issues, like regulatory and contractual risks, tied for the third-most-significant risks.

The survey also highlighted that leading organisations are 2.2 times more likely to view energy availability and cost as a top risk, indicating a focus on future emerging risks.

As electrification drives demand for power, brittle grid infrastructure raises concerns about whether the energy supply can keep pace. Leading organisations recognise that access to energy will become a significant future risk.

What should CPOs do?

Based on its survey analysis, Gartner offers a trio recommendations for CPOs:

• Assess and prioritise risks: CPOs should evaluate the impact of all major risk factors and prioritise them based on their likelihood, impact and velocity. This includes considering organisational maturity and industry-specific factors.
• Develop and/or strengthen partnerships: Segment suppliers that provide critical goods and services to the organisation and implement techniques to proactively safeguard the organisation.
• Navigate internal complexity: Collaborate with strategy, finance and legal teams to address macroeconomic factors and compliance issues effectively.

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