Strengthening supply chain resiliency and forging true supply partnerships is a key imperative that today ’ s procurement organizations must tackle .

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Written by : Rhys Thomas

You have to be a good customer to your vendor — especially with regard to mitigating risks throughout the supply chain .

Chris Windfelder

Managing Director EY-Parthenon Ernst & Young LLP

Procurement is expected to create resiliency for certain risks that exist within the supply chain .

Vijay Yalamanchili

Partner Supply Chain & Operations Consulting Ernst & Young LLP

No organization is immune to the challenges that threaten supply chains and operational continuity . But risk can be mitigated by building resiliency as an imperative — an objective for which procurement organizations are uniquely placed to achieve .

“ Procurement is expected to create resiliency for certain risks that exist within the supply chain ,” says Vijay Yalamanchili , Ernst & Young LLP Advisory Services Partner . “ We ’ re seeing a shift of those organizational capabilities in procurement , going beyond sourcing and starting to differentially invest in other areas , including contracting excellence and supplier risk analytics .”

Risk comes in many forms , but can largely be defined under five categories , as identified by Chris Windfelder , EY-Parthenon Managing Director : changes in customer preferences ; adoption to technology and associated cyber vulnerability ; geopolitical turmoil and governmental regulation ; brand perception and social media ; and unforeseen supply shocks , such as COVID-19 .

“ Building resiliency in your supply chain helps to mitigate , or at least understand , where your risk may be across those five overarching profiles ,” Windfelder says . Tabletop exercises and stress tests can be invaluable tools in understanding where an organization ’ s biggest risks lie . He adds : “ It really all starts with trying to laser in on which risks are most likely to occur , while also understanding that there ’ s always an unknown .”

Strengthening partnerships is also key in today ’ s market , where the more stretched supply chains and procurement ecosystems become , the more options suppliers have . “ You have to be a good customer ,” says Windfelder . “ Providing a true understanding of how you as a customer can add value to your vendor is equally as important as your vendor adding value to your own market — especially with regard to mitigating risks throughout the supply chain .”

Data is the final tool that procurement organizations must leverage when building true resiliency . “ We ’ re working with many of our clients to understand how they capture data , how they enhance the data that they already have with automation and AI , and then how they bring in the external information that is most valuable to their organization , because there ’ s a cost in doing so ,” Yalamanchili explains . “ These are the key elements of data and analytics that are absolutely critical for driving all the outcomes that are related to risk and building that resiliency .”

This publication contains information in summary form and is therefore intended for general guidance only . It is not intended to be a substitute for detailed research or the exercise of professional judgment . Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article .