In 2003, before launching Spend Matters, I co-authored a paper with FreeMarkets colleague Mark Clouse, now a leader in AT Kearney’s sourcing and procurement group. The paper was titled Global Supply Management: Strategies for Identifying and Managing Supply Risk. I have referenced this paper as part of my own analysis of the supplier management market in the context of looking at State of Flux’s recent annual report to see if there was anything still relevant in it. What I found upon reading it again was the supply risk challenges and opportunities we observed from a 2003 lens were every bit as relevant today as they were back then, albeit with a few modifications (e.g., substitute “re-shoring” for China or LCCS sourcing in places and it could have been written in 2013).
If you’d like to see the paper, drop me a line. I’m happy to send you a PDF copy. But in the meantime, I’ll share some of the highlights from this analysis in a series of posts, starting first with framing and exploring the supply risk challenge in general. As we observed, “for many organizations, the problem with supply risk is that it’s unknown, difficult to quantify, and even more challenging to act on. Even for those organizations that plan to tackle supply risk head-on, few have a complete understanding of the types of risk and how to prioritize their mitigation techniques.”
Our observations continue:
“The need to lower costs and gain efficiencies often drives companies to explore new types of supply strategies. Understanding the implications of a potential strategy is critical, because while some might produce the lowest price, the actual total cost of ownership may be very different. In addition, supply risk is not just a bottom-line concern. Failure to source the right product, at the right specification and to have it delivered at the right time, can have drastic implications on the top line in an environment where customers are demanding more for less. Indeed, organizations focused on supply risk must balance both cost and risk to drive results.”
This white paper will explore in more detail the types of supply risk that enterprises encounter, as well as techniques that can be used to mitigate them.
Curious? Drop Sydney a line (firstname.lastname@example.org), and we’ll send you out a copy of this dusty old analysis! Some topics are timeless. And supply risk is one of them.
See additional Spend Matters research coverage below: