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Only 53 % of companies have at least 90 % insights into their Tier 1 suppliers . That drops to merely 4 % of companies achieving a 90 %+ visibility for Tier 2 and only 3 % of companies claiming this level of visibility for lower tiers . Investments into people , processes and technologies that enable better supply chain visibility , information gathering , analytics ( including a strong focus on leveraging advanced analytics , predictive and prescriptive ) and decision making will be the differentiators of a successful — or failed — risk-management initiative . A welldefined response strategy is critical to get ahead with short , mid and long-term action plans for this and future risk events .
Q . WHAT SHORT-TERM , MID- TERM , AND LONG-TERM RECOMMENDATIONS WOULD YOU SUGGEST TO THE PROCUREMENT AND SUPPLY CHAIN INDUSTRY ?
» Short-term : Immediately start creating first-tier visibility into the existing supply networks in order to evaluate potential risk exposure and determine vulnerabilities . Follow through with n-tier visibility , although results will likely only be visible mid-term to long-term . This is key to enable effective response strategies . The event implication can span much further than direct supply chain ties into the conflict region . It is critical to find the best options to get around potential obstacles and to make timely and tough decisions that will keep your organisation moving forward .
Mid-term : Continue to commit and secure volumes as a risk response for the most fragile supply chains , including inventory , manufacturing capacity and labour . Diversify sources and routes where possible . Evaluate the ‘ catastrophe on top of a catastrophe ’ scenario and go beyond the initial direct impact and down to the raw material level even outside of the region .
Long-term : Increase resilience in highvalue , at-risk , concentrated supply networks by deploying strategic redundancies that drive competitiveness and cascade down . . Q . WHAT IMPACT CAN ALREADY BE SEEN IN PROCUREMENT AND SUPPLY CHAINS ?
» Supply chain leaders should brace for ‘ a catastrophe on top of a catastrophe on top of catastrophe ’ beyond what we have experienced thus far from trade wars , COVID-19 and the war in Ukraine . organisations will continue to commit and secure volumes as a risk response for the most fragile supply chains , including inventory , manufacturing capacity and labour , as well as diversify sources and routes where possible . Evaluate the ‘ catastrophe on top of a catastrophe ’ scenario and go beyond and down to the raw material level even outside of the region .
Among other critical commodities like metals and hydrocarbons , Ukraine and Russia produce 30 % of the world ’ s wheat supply , 20 % of its corn supply and 80 % of its sunflower oil , with much of it going to countries in Africa and the Middle East . Intra-African trade is also limited in scope to replace imports from Russia and Ukraine . Regional supply of wheat is not significant with other complexities like the lack of efficient transport infrastructures and storage capacity . Increased costs of fertilisers like urea and phosphate and energy shocks for energy-intensive inputs increase further pressures for global supply
24 May 2022