Are you clear about the risks in your supply chain? Key trends in supply chain monitoring and risk management

COVID-19 has disrupted our lives in more ways than we can possibly imagine. While it had a tremendous impact on our social interactions and ways of doing business, it also threw a monkey wrench into supply chains, triggering risks ricocheting across the third-party ecosystem.

In a recent survey that PwC conducted in the US across many sectors, at least one-third of the survey respondents said in the past year alone, they’d experienced significant disruptions due to third-party suppliers. 

• In a digital world, these disruptions included software supply chain disruptions, cloud breaches, third-party platform exposures and outages and downtime, and data theft. 
• In the physical world, companies had to face shortages and stockouts of raw materials and goods, shortages of containers and an explosion of shipping rates, congestion or blockage of important trade routes, an absence of workforce and delays in operations, combined with a sudden imbalance of supply and demand.

Could all of these disruptions have been avoided? Probably not entirely, but we believe they could have been better anticipated, and their impacts better mitigated if organizations had a more established program for monitoring and managing risks across their supply chain not only amongst its third parties, also beyond.

What does such a program look like? What are the key trends we are starting to observe in how organizations are shifting their approach to supplier monitoring? 

1. Centralize Supplier Oversight: a centralized supplier intake process is critical to uncover opportunities to eliminate duplications, identify gaps in coverage and simplify supplier risk management operations. A more coordinated and a consistent approach enables supplier stratification based on inherent risk, which can be used to determine the right level of due-diligence and ongoing monitoring steps across the supplier lifecycle.
2. Illumination of the Entire Supply Chain: organizations globally are strained as they struggle to manage the risk, much of which resides beyond their direct suppliers (third parties), to which there is limited or no visibility. Increasingly, efforts to combat disruption are being invested in looking beyond immediate third parties and considering 4th, 5th and n-th tier suppliers, by investing in solutions that provide instant illumination of the supplier ecosystem.
3. Risk-Based Due Diligence: a “One Size Fits All’ approach does not work for supplier risk management in today’s complex environment with thousands of suppliers in the ecosystem. Therefore, organizations are increasingly adopting a risk-based approach to focus due-diligence efforts on high risk third parties. 
4. Persistent Supplier Monitoring: efficient supplier risk management goes beyond a one-time risk identification process. Organizations are increasingly investing in solutions that support near-real time detection of potential threats and vulnerabilities in their supply chain, across key risk factors, to enable accelerated decision making and operational resilience.

At PwC, we are committed to helping our clients navigate these challenging times. An appropriately designed third-party risk management program can bring value to your organization in multiple, self-reinforcing ways, enabling confidence in the reliability of your supply chain to deliver the services and quality you expect, on schedule. Such a program can also help you reinforce your consumers’ confidence, while lowering your risk profile.

If you are evaluating your program or are looking to design/implement one, let’s connect! I’d love to learn more about your challenges and share what we have seen from across Canada and our global network to collaborate with you on a solution that meets your needs.