Gartner Survey Shows Supply Disruption is Top Risk to Procurement’s Future Success
Forty-Two Percent of Procurement Leaders Cite Supply Disruptions as Top Risk; Macroeconomic, Geopolitical and Compliance Risks Also Highly Cited
Supply disruption is the top threat to procurement’s future success, according to a survey by Gartner, Inc.
The survey, conducted from June through July 2024 among 258 sourcing and procurement leaders, was designed to help chief procurement officers (CPOs) understand and prioritize the most significant risks that could impede procurement operations, and what actions can be taken to manage them effectively.
"CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," said Andrea Greenwald, Senior Director Analyst in Gartner’s Supply Chain practice. "They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”
“The necessity of establishing a strategic supplier risk management program has never been more critical, as companies that neglect to develop such a program now will struggle significantly when the next crisis arises,” added Greenwald.
Forty-two percent of the procurement leaders surveyed identified supply disruptions, such as natural disasters and transportation issues, as the foremost risk to procurement success (see Figure 1). This prioritization arises from the unpredictability and velocity of such disruptions as well as the magnitude of their impact.
Figure 1: Top Risks to Procurement's Future Success (Sum of top 3 ranks)
Source: Gartner (October 2024)
Macroeconomic factors, which include economic downturns, inflation, and other economic factors, rank as the second most significant risk. These factors, while more predictable, can substantially influence long-term procurement strategies.
Geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks, tied for the third most significant risks.
The survey also highlighted that leading organizations are 2.2 times more likely to view energy availability and cost as a top risk; indicating a focus on future emerging risks. As electrification drives demand for power, brittle grid infrastructure raises concern about whether the energy supply can keep pace. Therefore, leading organizations recognize that access to energy will become a significant future risk.
Based on the survey analysis, Gartner recommends that CPOs:
Assess and prioritize risks: CPOs should evaluate the impact of all major risk factors and prioritize them based on their likelihood, impact, and velocity. This includes considering organizational maturity and industry-specific factors.
Develop and/or strengthen partnerships: Segment suppliers that provide critical goods and services to the organization and implement techniques to proactively safeguard the organization.
Navigate internal complexity: Collaborate with strategy, finance, and legal teams to address macroeconomic factors and compliance issues effectively.
Chief supply chain officers (CSCOs) use Gartner's interactive, self-service tools for supply chain risk management to identify, analyze and mitigate the impact of emerging supply chain risks for their business.
Please read more in: Prioritizing and Managing Risks to Procurement’s Future Success.
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