… and it’s too bad it took the worst global pandemic in 100 years, two wars, exacerbated natural disasters (including one of the worst global wildfire years on record), and Panamanian droughts for Procurement leaders to realize this. (Basically, the fact that a Gartner survey finally confirmed this should not come as a shock!)

When you go back to basics (i.e. the business 101 that it seems most business leaders have been skipping for the last couple of decades), there are two truths that all businesses are subject to:

1. Profit = Revenue – Expenses, which makes the CRO and the CPO the two most important people in the business, and if market conditions prevent revenue from increasing, the CPO becomes the most important
2. Business that sell product need to make or acquire product to sell. This requires supply and people.

This says that, when you abstract it high enough, your two three primary risks are:

• supply (no supply, no product; no product, no sales; no sales, no capital)
• talent (the skilled resources to acquire/make the product economically and run the company)
• capital (you need money for supply, talent, and operations)

And when you dive in, you see that supply disruption is far and above any other risk because:

• today’s supply chains are global and require multiple forms of limited transportation
• with thousands of suppliers in dozens of countries and regions (across 4, 5, and sometimes even more tiers)
• which are all exposed to the economic, environmental, geopolitical, and societal risks in the locales in which they operate
• which means you are exposed to all of the economic, environmental, geopolitical, and societal risks in which they operate!

Thus, if your extended supply chain spans 30 or 40 countries, then you are exposed to every risk of those 30 or 40 countries at all times!

Given the drastic increase in multiple

• economic,
• geopolitical,
• societal, and
• environmental

risks over the past two decades, as well as the increase in cyberattacks, which makes the weakest unknown supplier in your supply chain your weakest link (if a hack into their system provides a backdoor into their buyer one tier up the chain, which then provides a backdoor into their buyer one tier up, until the hackers trace their way back to you through a chain of back doors).

Given that, right now, multiple risks in multiple risk categories are materializing every day on this planet, at a rate that exacerbates annually, we are at the point where no company is going to even go a year without a risk event impacting their supply. (This doesn’t mean they won’t get it, just that it will be late or cost more, and either could cause substantial loss.)

So if you’re not sourcing and procuring with mitigation strategies in mind at all time, start now. Multi-tier visibility is no longer enough. Advance warning is no longer enough if you are not ready to act with another option.