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Deloitte warns of supply chain visibility risks

Mar 07
Tags: Deloitte, Strategy
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Deloitte warns of supply chain visibility risks

Supply chain visibility is a key area where management consultants could find themselves helping procurement departments this year and beyond, research has indicated.

The Deloitte annual Global Chief Procurement Officer (CPO) survey found that up to two-thirds (65 per cent) of procurement leaders have limited or no visibility beyond their tier-one suppliers.

Only six per cent of respondents said their business has achieved full transparency across its entire supply chain.

This lack of visibility could pose a significant risk to many organisations, with Deloitte pointing out that strong understanding of the supply chain is crucial to regulatory compliance and risk planning.

More than half (54 per cent) of procurement leaders said managing risk is a priority for them. Brexit and the ongoing negotiations regarding the North American Free Trade Agreement were the issues most likely to be cited as significant risk factors.

Cost reduction (78 per cent) emerged as an even bigger focus than risk management for CPOs, followed by new product/market development (58 per cent).

Analysing the research, Brian Umbenhauer, principal and global head of sourcing and procurement at Deloitte, said it was "both a worrying and an opportunistic finding" that so many businesses have limited visibility beyond tier-one suppliers.

"This has major implications for organisations across all industries, particularly for meeting regulatory and corporate social responsibility requirements and for the identification and mitigation of supply chain risks," he added.

"Improved transparency of pricing, supplier locations and critical dependencies can help procurement leaders deliver greater value and avoid potentially significant regulatory, reputational and operational risk."

Other key results from the survey showed that CPOs are demonstrating an appetite for business innovation, but adoption of digital tools in procurement has been slow.

Around one in six procurement leaders (17 per cent) said they don't currently have a digital procurement strategy.

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