As the global business landscape continues to evolve, organisations are increasingly prioritising Supplier Relationship Management (SRM) to navigate a complex and uncertain supply chain environment which is fraught with geopolitical tensions and climate-related disruptions. SRM now requires a systemic approach from organisations. By developing mutually beneficial relationships businesses can enhance supply chain efficiency, quality, innovation, and risk management.
Our latest Global Business Optimism Insight Report found that businesses are quietly optimistic. The Global Business Financial Confidence
Index improved 12.3% for Q3 2024, as businesses worry less about supplier delivery time, delivery cost, and concentration. However, managing disruptions to supply chains effectively and maintaining supplier relationships in the face of global adversity remains a challenge.
Adapting to the new normal
Globally, businesses predict that supply chain risks will remain elevated and have proactively adapted to this new environment.
Geopolitical tensions, soaring shipping and freight costs, unsafe trade routes, protracted delivery delays, container shortages, and traffic jams at several transshipment ports serve as obstacles to supply chain continuity. In the UK alone, supply chain continuity took a 10.8% hit as the country grappled with lorry driver shortages and other means of land transport, as highlighted by our latest research.
Labour disputes, industrial action, and the growing danger of pervasive cyberattacks for third-party suppliers are exacerbating organisations’ concerns. Around the world, organisations are braced for sustained supply chain risks. As such, the focus on robust SRM strategies has never been more critical to maintaining continuity and competitiveness.
Shrinking confidence in large businesses
The third quarter of 2024 revealed stark differences in how businesses of varying sizes are coping with supply chain challenges.
Optimism among small businesses surged remarkably by 21.8%, thanks to their ability to source locally. Nevertheless, medium and large enterprises remain cautious, facing a decline of 2.4% and 13.4% respectively in their confidence indices. This disparity underscores a growing trend: localised supply chains are proving more resilient. Large businesses linked to global supply chain networks and sources across geographies face the most exposure to unpredictability. This is true whether in terms of shipping costs, congestion across routes, or lengthier routes.
For the past decade, many companies have prioritised lean supply chain strategies aimed at reducing waste and maximising value. One on hand, this approach seeks to provide customers with what they want at the lowest possible cost. Hwoever, it’s impossible to deny that it has made supply chains increasingly fragile. Companies have become overly reliant on limited suppliers and just-in-time delivery models, leaving them vulnerable to disruptions.
Recent shocks have shown that supply chain challenges disproportionately impact these lean organisations. To combat this fragility, businesses should adopt flexible strategies that incorporate multi-sourcing, near-shoring, and on-shoring practices. Building redundancy within inventory systems may seem counterintuitive to lean principles but it is essential for ensuring resilience in operations. By diversifying their supplier base and maintaining a buffer of critical supplies, businesses can mitigate risks associated with localised disruptions. Not only that, but they can ensure continuous supply, minimising delays and maintaining service levels despite any unforeseen challenges.
Additionally, knowing your consumer demand can help expose any business vulnerabilities, giving owners a better understanding of their business operations.
How data and collaboration can bridge the resilience gap
In times as uncertain as these, adaptability runs supreme. By harnessing real-time monitoring and predictive modelling, businesses can identify potential risks and vulnerabilities within their supply networks based on historical trends, market dynamics, and weather patterns.
This proactive approach of incorporating data and analytics enables swift response and adaptation enabling companies to safeguard against disruptions and ensure business continuity.
Businesses of all sizes should also lean on strategic diversification to mitigate supply chain risks. By diversifying their supplier base geographically, businesses can reduce the impact of disruptions in any one region.
Furthermore, by moving production closer to consumer markets or forming agreements with suppliers in politically stable regions, organisations can minimise the risk of unforeseen, wider disruptions while maximising cost-efficiency. In this volatile landscape, effective SRM is no longer just a competitive advantage—it’s a necessity. Collaborative initiatives such as supplier partnerships and consortiums can also foster greater resilience. by pooling resources and expertise to address common challenges.
The challenges faced by businesses across the supply chain must be seen as a clarion call for leaders to reevaluate their approach to supply chain resilience, and proactive risk management and strategic foresight prove to be indispensable tools for navigating the complexities of today’s interconnected world. By leveraging smart data and analytics in risk monitoring, organisations will be better positioned to understand the evolving risk landscape enabling proactive decision-making and agile response strategies which will ultimately lead to a more resilient supply chain.
Adopting emerging technologies and automation tools to enhance efficiency, and transparency will chart a course towards resilience and sustainable business growth in the face of macro-challenges that are beyond a business’ control.
Moving forward, organisations that can successfully navigate these complexities will be better positioned to ensure supply chain continuity and maintain a competitive edge in an unpredictable world.
- Collaboration & Optimization
- People & Culture
- Sourcing & Procurement
