Risk mitigation: Is supply chain the weakest link in the C-Suite strategy?
22 June 2023
“Global supply chain disruptions, higher raw material and labour costs, and more competition are some key factors that have led to an increase in the cost of developing, producing, and marketing products or services. Consumer companies face challenges regarding reduced profit margins, operational inefficiencies, or loss of competitiveness.”
Matt Dallisson, Global Head of Consumer Practice, Partner Signium UK
Signium Global’s latest research report ‘Leadership in a Polycrisis’, provides an in-depth review of business risk mitigation in a world where each region is facing multiple headwinds that may be unique to that area. However, one threat that affects even the most self-reliant countries is supply chain security.
Pre-pandemic, business leaders kept an eye on costs and service from key suppliers, periodically resolving delays and disruptions that may have occurred. Providing everything was running smoothly, the supply chain rarely posed a major concern for the C-Suite and responsibility for it largely fell to operations and supply chain managers.
As Covid19 shut down businesses and industries around the globe, businesses looked to the C-Suite for solutions to the impacts of several issues, including a surge in demand for medical supplies during the pandemic, manufacturing constraints, and geopolitical tensions.
What has followed this extraordinary period affecting the supply of goods and services is the catch-up period we are now in before the supply chain is running optimally again. So, what must today’s C-Suite address when their supply chain poses a risk to performance? The Liberty Mutual Insurance Risk Matrix highlights issues many companies are still facing – or may face – due to supply chain challenges.
Financial performance – Inflation, higher costs, and shipping slowdowns, are making it harder to meet customer demand and fiscal projections.
Quality challenges – Supply chain let-downs have seen many companies seeking new vendors to fulfil orders, often leading to quality control issues.
Labour shortages – A combination of pandemic disruptions, the “great resignation”, and the “great retirement” among other things, have created a global labour shortage which has driven wage costs up.
Energy prices skyrocketing – the energy sector has been beset by supply chain issues and long lead times in obtaining oil and gas drilling equipment have halted many operations.
Delayed shipments – are placing a strain on businesses worldwide, and costs to transport goods are increasing exponentially.
These external factors and many more are top of mind for the C-Suite and risk professionals, who are all too aware that in big business, manufacturing, logistics and a host of other vital sectors – supply chain has the potential to become their weakest link.
When supply chain failure collides with real human needs
“Supply chain issues, the aging of the population, and the huge strain on the global healthcare system after the pandemic are the main challenges for Life Sciences companies. Players in the industry are identifying solutions to make it worthwhile to invest in R&D and product development, while also maintaining price accessibility and having onshore production facilities to avoid future disruptions in pharmaceutical supply.”
As Signium Global’s new research highlights, companies can navigate supply chain challenges more effectively by working closely with suppliers, investing in research and development (R&D), and employing agile strategies.
The Life Sciences sector faces several key challenges that impact operations and profitability. The most obvious ones are maintaining profit margins and dealing with high R&D costs, data management and security, intellectual property protection, and ever-changing regulatory environments.
Less obvious challenges that require intense collaboration with governments can include global health disparities and ensuring readiness and response for future global pandemics.
How does the C-Suite mitigate risks to human health / another pandemic type event?
Risk mitigation in healthcare and life sciences is the process of prevention of harm by determining what staff, providers and patients require as part of a framework that can be implemented rapidly in the event of another mass medical crisis or large-scale potential harm.
As Signium research shows, the key drivers here are:
Collaboration between companies and governments to develop domestic production capabilities that reduce dependency on foreign suppliers.
To overcome sustainability challenges effectively, companies should establish a clear sustainability strategy with measurable targets; invest in R&D for innovative solutions, and collaborate with suppliers and stakeholders to promote sustainability throughout the value chain.
Ensuring compliance with environmental regulations through regular risk assessments and audits, and transparent communication about sustainability efforts, will help build trust with stakeholders and enhance brand reputation.
A recent article published on supplychainbrain.com titled: ‘Supply chain deserves a spot at the C-Suite table’, the author notes, businesses must be resilient and determined to elevate their supply chain partners. It is crucial for business to shape and develop a strategy that prioritizes supply chain resilience, that aims not only to focus on avoiding disruptions, but also on redesigning performance whilst minimizing risk.
About the Report
The full report is available here:
Signium recently published a comprehensive research report that identifies the key risks faced by business leaders today and highlights practical ways to navigate through turbulent times. The report engages seasoned business executives and partners across Signium’s global network to gather views of what lies ahead and how leaders can futureproof their businesses.