ISM & Amazon Business: Supply Chains are Unprepared

Supply chain leaders have a difficult environment to navigate. On one side, the corporate mindset has fundamentally shifted toward resilience but, on the other, daily operational reality trails behind.

A joint global study by the Institute for Supply Management (ISM) and Amazon Business highlights this gap. The whitepaper, Balancing Cost and Risk: An Operating Model for Supply Chains, found that of the 425 global professionals surveyed, 71% of organisations say balancing cost and risk now drives procurement strategy.  

Despite the majority agreeing that this is the driving factor, less than half (45%) of those asked said they are prepared for supply chain disruptions.

Manual reporting bottlenecks

A potential factor when considering that the majority of supply chain leaders feel unprepared is that there is a persistent data bottleneck across global networks, with the report finding that 65% of firms still rely on manual data reporting to gather supply chain data.

Ongoing disruption is the reality in the current volatile climate, which means relying on manual data collection likely leaves companies exposed. It also limits the speed at which a network can respond to market shocks. What is instead required by decision-makers is real-time upstream visibility.

Debbie Fogel-Monnissen, ISM Interim CEO, explains that modern networks operate in an environment where disruption is no longer an exception. 

"Leaders recognise the need to balance cost with resilience, but our research shows many are still building the capabilities to act on that insight. Closing that gap is essential to protecting performance and ensuring continuity," she says.

Advanced risk management is stalled

The technological deficit extends into risk monitoring capabilities. While more than half (58%) of organisations use e-procurement platforms and 51% use supplier portals, more predictive tools remain heavily underutilised.

Almost two-thirds (64%) of companies use basic impact analysis, but far fewer use advanced risk evaluation methodologies:

• Risk matrices are used by 49% of organisations
• Scenario planning capabilities are utilised by 46% of firms
• Advanced predictive analytics remain largely unimplemented across industries.

Given how vulnerable modern supply chains are, this may give many cause for concern. Traditional evaluation measures like financial health and quality performance may be foundational, but cybersecurity is now the leading risk concern shared among those surveyed. 

As global supply networks grow ever more interconnected, a single digital vulnerability in a minor part of the network can mean an entire production line can be halted.

Risk-adjusted TCO

Looking at how to bridge the gap between strategy and execution, supply chain leaders are moving away from traditional cost management strategies. The study found that 71% of respondents name long-term contracts as how they manage costs during uncertainty, but progressive companies are expanding their remit. 

One emerging operating model is taking shape centred on a risk-adjusted total cost of ownership approach, which is a framework that incorporates service performance, process efficiency and disruption exposure alongside unit price.

Greater resilience is the first step for most modern supply networks, but to protect performance, leaders must look beyond basic spreadsheets and instead focus on automated, real-time data visibility.

Strategy and the execution of innovative technology need to align to secure vulnerabilities within global supply chain networks.