Supply Chain Risk Management

Increase supply chain risk readiness to combat market disruption

Where are you on the supply chain risk management continuum?

Technology plays a key role in moving from “good” to “great” on the supply chain risk management continuum. It’s the catalyst for driving business value from market intelligence investments.

Gartner has identified what differentiates the best approaches to supply chain risk management. Download the scorecard to compare your organization to best practice, and prioritize the activities and initiatives required to reach the next level of maturity.

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    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

    Market disruption challenges supply chain risk management

    Key tenets of supply chain risk management are enhancing resilience and improving competitiveness. But supply chain risk management today must account for unprecedented, fast-developing market disruptions, making 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 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.

    Define Your Risk Appetite to Create a Resilient Supply Chain

    A comprehensive risk appetite statement enables teams to mitigate and utilize risk to maximize value creation and drive business success.

    Write a risk appetite statement

    Follow 4 steps to prepare, draft, and operationalize a supply chain risk appetite statement.

    Increase supply chain risk awareness

    Build a framework to prioritize, continuously assess, and govern supply chain risk.

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    Client Testimonial

    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

    Supply chain risk management FAQs

    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 analysts identified three 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.

    Gartner experts in supply chain risk management

    Gartner supply chain experts include more than 100 people worldwide. Meet a few of our leaders.

    Caroline Chumakov
    Principal Analyst

    Miguel Cossio
    Director Analyst

    Koray Kose
    Senior Director Analyst

    Peter Weiss
    Executive Supply Chain Partner

    Gartner experts enable supply chain risk management

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