Friday 16th Aug 2019 - Logistics & Supply Chain

Industry leaders to boost investment in supply chain risk management

The majority of companies see supply chain risk management as important to their business, but only seven per cent are generating returns of over 100 per cent on their supply chain risk management investments, according to a study by Accenture.

Seventy-six per cent of companies in the “Accenture Global Operations Megatrends Study – Focus on Risk Management,” describe supply chain risk management as important or very important.

And 25 per cent plan increased investments of at least 20 per cent in supply chain risk management in the next two years.

More than 1,000 companies across ten industries were surveyed. While most said they saw a return on their investment in risk management, the leading seven per cent said they received a return of more than 100 per cent. 

Accenture said there were three practices that distinguished these leaders from the rest.

* Sixty-one per cent of the leaders as compared to 37 per cent of other companies make risk management a strategic imperative and recognise the importance of capabilities that help them gain greater visibility and predictability across their supply chains.

* Forty-three per cent of leaders versus 32 per cent of others had a central risk management function led by an executive in the C-suite or a vice president who oversees all of their risk management activities.

* Leaders were nearly three times as likely to say they planned to boost their investment in risk management by 20 per cent or more in the next two years. Furthermore, nearly 70 per cent of leaders said their investments will generate a return of at least 100 per cent in the next two years as opposed to 4 per cent of others.

Mark Pearson, senior managing director, Accenture Strategy, Operations, said: “Such a commitment to risk management also can help managers guard against business disruptions in the wake of natural disasters, geo political events, shifts in commodity or shipping prices, or any number of circumstances that can endanger a company’s operations.”

The study highlighted the top three sources of risks: information technology (39 per cent), cost and pricing factors (39 per cent); and the global economy (37 per cent).

Natural disasters or unforeseen events, such as the Thai floods or the tsunami in Japan, were only cited by 17 per cent of the respondents, making that the least frequently flagged risk.

The areas most frequently exposed to those and other risks in the corporate supply chains are quality (45 per cent), planning (39 per cent), supply chain skills and talent (38 per cent) and sourcing and procurement (37 per cent), according to the executives.

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