Supply Chain Risk Management

Increase supply chain risk readiness to combat market disruption

How to Increase Supply Chain Risk Awareness

89% of companies experienced a supplier risk event in the past five years, yet awareness and plans to mitigate risk lack maturity.

The best companies utilize technology in supply chain risk management, increasing their effectiveness in supplier risk tactics by almost double.

Download the latest supply chain risk management research to build a framework that minimizes risk.

Download the Supply Chain Risk Management Framework

Prioritize, assess and govern supply chain risk.

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    Market Disruption Challenges Supply Chain Risk Management

    Key tenets of supply chain risk management enhance resilience and improve competitiveness. But supply chain risk management today must account for unprecedented, fast-developing market disruptions, which makes it difficult to achieve agility and competitive advantage.

    Market disruptions include: natural disasters, pandemics, political uncertainty, economic upheaval, cyber and terrorist attacks, third-party or supplier threats, and rapid swings in consumer preferences and demand.

    Supply chain transformation also complicates supply chain risk management - lean, but complex and globally dispersed operations add risks, and the supply chain risk management process is vital in wringing out efficiencies and costs

    A recent survey shows that 89% of companies experienced a supplier risk event in the past five years, yet company awareness and plans to mitigate it lack maturity.
    Companies utilizing technology in supply chain risk management increase their effectiveness in supplier risk tactics by almost 2x.

    Digitalization Enables Supply Chain Risk Management

    To respond to market disruptions effectively, supply chain risk management must be a collaboration between supply chain, procurement, and enterprise risk management (ERM) managers.

    Innovative technology solutions and advanced analytics enable continuous review and integration of supply chain risk management with the business. Heads of supply chain, procurement, and ERM must work together to assess supply chain failure points and the possible impact on supply chain risk management, and put control measures in place to prevent a supply chain interruption. 

    Companies utilizing technology in supply chain risk management increase their effectiveness in supplier risk tactics by almost 2x.

    Supply chain risk management insights
    you can use

    Gartner provides supply chain leaders with insights, advice, data and tools to develop effective supply chain risk management strategies that predict and mitigate new disruptions.

    Reduce Global Supply Chain Risk Exposure

    Companies that make themselves a smaller target can shape the rate of supply chain disruptions they experience. Download the Global Supply Chain Risk Report to explore key strategies for shaping the rate of supply chain disruptions.

    Supply Chain Risk Management Scorecard

    Download the Supply Chain Scorecard to compare your organization to best practice, and prioritize the activities and initiatives required to reach the next level of risk maturity.  

    Supply Chain Scenario Planning

    Use 4 steps to run an actionable scenario plan that enables your team to act with confidence during uncertainty and take informed decisions. Download the Supply Chain Planning Guide.

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    Gartner Supply Chain Risk Management
    Case Studies

    Gartner has played a role in the development of a supply chain risk management strategy, the effects of which will be the risk mitigation associated with catastrophic-type events that could be on the order of magnitude of hundreds of millions of dollars.

    Healthcare Industry Client
    Case Study

    Discover supply chain best practices from your peers

    During this on-demand panel discussion, you’ll hear from supply chain leaders on how they are continuing to lead during times of disruption. 

    Watch “Panel Discussion: Lead Through Times of Disruption in Supply Chain to hear:

    • Real-life examples of how companies leveraged Gartner insights and tools to navigate disruption
    • Supply chain innovation and agility during times of disruption
    • How to address your most pressing supply chain challenges

    Experience Supply Chain conferences

    Join your peers for the unveiling of the latest insights at Gartner conferences.

    The Gartner Supply Chain Podcast

    The Gartner Supply Chain Podcast explores the latest ideas and innovations for driving sustainable supply chain success. Join your hosts Thomas O’Connor and Caroline Chumakov as they uncover strategic insights and tactical tips in conversation with global supply chain experts.

    Listen Now

    Gartner Supply Chain Top 25 for 2022

    See the 18th annual ranking to learn the standard for supply chain excellence.

    See the Top 25 List

    Supply Chain Risk Management FAQs

    Supply chain risk management provides a consistent framework for organizations to become more resilient to supply chain risks. 

    Gartner's supply chain risk management process focuses on collaboration to develop and deploy an outside-in framework and mindset to shape disruption to design out and manage risks across diverse ecosystems of partners — digital and physical. It is strengthened by technology used for risk identification, holistic impact analysis and monitoring.

    Here are 3 key risk management recommendations:

    • Link risk management activities to strategy to focus on impacts to key activities, products, and services
    • Establish processes and governance with risk indicators to identify and prioritize risks, decision making on acceptable risk levels, risk appetite, response and escalation
    • Track interdependencies, bottlenecks and potential failure points over the product life cycle

     

    Effective supply chain risk management is not a guarantee for mitigation. Effective risk management will help to prevent some specific risk events and types that fall into one of four risk categories:

    • Aleatory Risks: Known in type and impact, specifically those that require certain know-how and can be foreseen

    • Latent Risks: Known to others in the supply chain as hidden knowledge

    • Epistemological Risks: Known as existing risks, but without further knowledge on how they would impact

    • Ontological Risks: Unforeseen, with complete lack of insights

    Gartner analysts identified 3 common obstacles to supply chain risk management:
     
    • Supply chain risk management commonly emphasizes the process of mitigation reflecting limitations, additional tasks and audits that adversely impact the value, complexity and velocity of sourcing processes and operations.
    • Supply chain/procurement leaders prioritize business continuity over agility in the risk appetite statement on which supply chain risk management is grounded by focusing on risk mitigation rather than risk utilization as the incubator of innovations.
    • The misconception of risk formalized in a risk appetite statement limits sourcing’s ability to thrive in uncertainty and leverage imbalances to support and advance the business strategy through supply chain risk management. Over time, this approach decreases competitiveness with fading competencies.

    Gartner analysts recommend that supply chain/procurement leaders responsible for supply chain risk management:

    • Analyze and define the optimum risk utilization applicable to sourcing activities to drive the business strategy forward within the underlying industries, and develop and formalize a sourcing risk appetite statement.
    • Build a lean and effective cross-functional governance framework to serve as a risk oversight and advisory function with the key mission to support risk-based decision making.
    • Use an integrated risk model to create an optimized risk utilization sourcing strategy with value-add sourcing plans supported by enhancements in people, processes and tools.

    Supply chain and procurement leaders are well-positioned to leverage the integrated risk model, establishing an augmented sourcing function delivering results above expectations, lowering the risk exposure and providing cross-benefits in support of the broader business strategy. This will position the enterprise favorably in its markets and industries as a core player with which innovative and disruptive companies would like to engage. Since the burden of asymmetric partnership is reduced through an agile and adaptive sourcing organization, untapped innovations and key external competencies are now able to come into the company across all engagements, enhancing its competitiveness.

    For sourcing, this will drive a stronger linkage to stakeholders and boost, through its initiatives, the business strategy success. Sourcing will truly become a business partner and strategy shaper with a clear purpose and a reserved seat for the supply chain/procurement leader in the C-suite, right next to the CEO.

    Gartner experts enable supply chain risk management

    We provide supply chain risk management support, helping 2,500 supply chain leader clients improve decision making.