SAP: Focusing on supply chain resiliency
In the first of four articles, we zone in on the importance of supply chain resiliency.
The COVID-19 pandemic has showcased the importance of lean and efficient supply chains, highlighting the necessity for flexibility and innovation during uncertain times. In SAP’s global survey, 1,000 executives from business functions spanning the supply chain were asked questions about the state of the supply chain landscape and the current complex environment. SAP identified a small group of companies among its survey respondents that are successfully managing their supply chains - called Supply Chain Leaders. SAP highlighted their best practices, enabling SAP to quantify the benefits of a well-run supply chain and a balanced approach to difficult objectives.
The research showed that companies with stronger strategies for customer-centricity, visibility and sustainability, through the application of intelligent technologies are seeing results from their efforts in terms of supply chain effectiveness, resilience and overall financial performance. While all supply chains are vulnerable to risks in a global economy, execution on clear strategic objectives is vital. This supported by the correct tools and tactics to mitigate risks and minimise complexity will make such events more manageable.
COVID-19 has demonstrated supply chain vulnerabilities and its impact of these on the new world economy. As a result, the importance of supply chain resiliency has never been more important. SAP’s survey, created in early 2020 as COVID-19 began to take hold worldwide, found that 39% of its respondents had experienced negative risk events at some point in their supply chains over the past three years. A similar proportion - 40% - found that their exposure to supply chain risks had increased over the same period of time. In contrast, just a quarter of its Supply Chain Leaders reported suffering a negative risk event and 31% say their risk exposure increased.
The research leader group stands out in several key ways. 76% of the leader group agreed that their employees are agile and can react to unforeseen events (compared to 52% of others). They are also significantly more likely to report high levels of collaboration with their risk management and compliance functions - 75% vs 63%. In addition, leaders have significantly higher levels of visibility into their supply chains and have successfully broken down silos within their organisations. This combination of agile employees, seamless collaboration with risk management and other functions, and a flatter organisational structure will reinforce supply chain resiliency.
While no supply chain can ever be fully prepared for a pandemic such as COVID-19, a highly collaborative company culture and strong visibility into all areas of the supply chain, can create resilience and agility, while lessening the impact of risk events.