Photo: INVERTO

According to INVERTO’s Risk Management Study 2022 72% of businesses reported supply chain issues in the last six months of 2022, and do not expect the situation to improve any time soon.

The research by INVERTO, the Boston Consulting Group subsidiary that specialises in procurement and supply chain management, found that security of supply remains the top procurement priority for 77% of businesses. This is followed by the effects of inflation (66%) and energy supply (48%). To mitigate unprecedented supply chain risk, businesses are expanding inventories, using additional suppliers and cooperating more intensively within existing supply chains.

The study also found that more and more companies are investing in digital tools, with the number of businesses extensively using digital tools to address supply chain risk increasing by 13% to 29% compared to the previous year. 47% are partially using digital tools, however, there are still around a quarter of respondents not using any digital solutions for their risk management.

Daniel Drylie, principal at INVERTO UK, said: “Companies have understood that effective monitoring of supply chain risks is by far the most effective when using digital tools and the increased transparency and automated monitoring that they provide. Today, the question is no longer whether a company digitises processes, but how.”

The study also revealed that the ability to react to unexpected events at short notice is becoming increasingly important for procurement.

Mr Drylie explained: “While measures such as long-term framework agreements or dual-sourcing strategies continue to be important for companies when dealing with procurement risks, we have also witnessed that the ability to react quickly is becoming more important. The secret here lies in getting onto the front foot and spotting risks before they actually become issues.”

In that light, 43% of respondents have set up a task force for the ad-hoc management of acute risk cases and 35% use an early warning system to detect risks. 119 procurement managers and managing directors, predominantly from the UK and other European countries, took part in the latest INVERTO risk management study. Around half of them come from the chemical, consumer goods, automotive, and mechanical and plant engineering sectors.