Gartner surveyed sourcing and procurement leaders to help CPOs understand and prioritise the most significant risks which could impede operations.
Supply disruption currently stands out as the biggest threat to the future success of the procurement function.
That’s according to research from Gartner, which surveyed sourcing and procurement leaders over the course of several weeks in a bid to help CPOs understand and prioritise the most significant risks which could impede procurement operations.
Researchers were also seeking to unearth a series of actions that can be taken to help manage risks effectively.
“CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events,” explains 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.”
What are the top risks to procurement?
Garter’s survey saw ‘supply disruptions’, such as natural disasters and transportation issues, emerge as the foremost risk to procurement’s future success.
More than two in five (42%) procurement leaders selected this among their top four risks.
The consulting giants says this level of prioritisation has arise from the unpredictability and velocity of such disruptions, as well as the magnitude of their impact.
Macroeconomic factors, including economic downturns, inflation and other economic factors, ranked as the second-most-significant risk having been selected by a third (33%) of respondents.
Clearly, these factors – while more predictable – can substantially influence long-term procurement strategies.
Meanwhile, geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks, tied for the third-most-significant risks (32%).
Another key finding from the research was that leading organisations are more than twice as likely to view energy availability and cost as a top risk, potentially indicating an emerging risk.
Gartner’s advice for CPOs
Based on analysis of its survey results, Gartner offers three recommendations for CPOs:
- Assess and prioritise risks: Gartner says 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: Leading organisations should segment suppliers that provide critical goods and services to the organisation and implement techniques to proactively safeguard the organisation, according to Gartner.
- Navigate internal complexity: Gartner advises collaborating with strategy, finance and legal teams to address macroeconomic factors and compliance issues effectively.
