Risk management must be a boardroom topic in 2013, says supply chain expert

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Supply chains will continue to adapt to the struggling European economy in 2013, according to leading end-to-end supply chain consultancy Crimson & Co.

Richard Powell, Crimson & Co managing director, said the poor economy of 2012 has changed the way the supply chain does business.

“The economic climate has continued to drive an emphasis on ‘price reduction’ from suppliers to an extreme. The result has been that relationships are confrontational and actually work against collaboration rather than towards co-operation.

“Against this cost cutting background, businesses are still being asked to respond to the ever increasing pace of innovation. Innovation is vital for sales, and businesses are trying to find ways to manage the complexity this creates.”

Powell said the natural disasters of recent years still weighed heavy on the mind of supply chain professionals with companies exploring sourcing options more actively, with risk management being a bigger factor than previously. 2012 also saw more companies look at their logistics operations and how they can get money out of it. This is especially true for high margin sectors such as pharmaceuticals and energy, he said.

“As we look to next year, supply chain dynamics will change,” said Powell. As the Euro crisis continues, even smaller European companies are starting to look wider for markets outside Europe. Adapting from a relatively local supply chain to an international supply chain will be commonplace, presenting new challenges, said Powell.

As markets become more segmented and product lifestyles shorten, businesses need to ensure the benefits of managing at a regional or global level are balanced against the local requirements.

Powell said: “Customer demands are getting more complex and ‘one size fits all’ does not give competitive benefit. Those tailoring their chains will see a successful 2013.”

“Next year, like this year, most businesses will be impacted by the world’s substantial currency challenges, commodity fluctuations, political instability and likelihood of natural disasters. Boardroom thinking needs to change to put risk management and continuity higher up the agenda, and to take a holistic view of the supply chain rather than just looking at the headline purchase cost.”

Crimson & Co has also announced it has appointed Matt York to lead its organisation design practice, as it strengthens the support it offers clients to ensure that they have an organisation that is capable of meeting current and future needs.