What is supply chain risk and why does it matter?
Supply chain risk involves potential disruptions that may affect the movement of goods, services, and information across a company's supply network. These risks arise from third-party vendors, geopolitical issues, environmental rules, or operational problems, each of which can impact supply chain effectiveness and business continuity.
As global supply chains grow more complex, disruptions have become more frequent. A study conducted by Gartner 1,2 indicates that 89% of businesses encountered a risk event related to suppliers within the last five years. Despite this, many still do not have well-developed awareness and strategies for mitigation. As a result, 79% of major companies are focusing on improving resilience and risk management in the upcoming two to three years.
Disruptions can be costly. Today, aprox. one in twenty companies has experienced supply chain disruptions exceeding $100 million 3, underscoring the importance of risk management in safeguarding financial stability and operational efficiency.
• Lack of visibility: 55% of businesses lack insight into their upstream supply chain.
• Limited supplier transparency: Only 14% can track third-tier suppliers.
• Raw material shortages: 83% of companies faced material shortages last year.
• Inadequate risk planning: Only 37% engage in scenario planning.
• Gaps in digital adoption: 67% use digital dashboards for visibility, reducing disruptions.
To effectively handle these risks 4, businesses should focus on gaining real-time insights into their supply chain, enhancing collaboration with suppliers, and implementing risk monitoring driven by compliance.
Leading organisations are prioritising three core strategies to enhance supply chain resilience:
1. End-to-end visibility: Investing more into data-driven platforms to track supplier performance, ESG risks, and compliance gaps.
2. Proactive risk planning: Integrating scenario modelling and supplier engagement strategies to anticipate disruptions.
3. Technology-driven compliance: Digital tools help standardise risk assessments, track supplier performance, and improve decision-making.
As regulatory requirements grow and risks change, businesses require a flexible and adaptable supply chain risk management solution to stay competitive.
Read more about how Factlines' Supplier Relationship Management (SRM) software can help you manage supply chain data and business-critical risk.
1. https://www.gartner.com/en/supply-chain/trends/supply-chain-risk-awareness
2. https://www.gartner.com/en/articles/how-supply-chain-leaders-can-prepare-for-the-next-big-disruption
