Why Resilience Is Now a Key Part of Strategy
Every procurement leader has a story about a problem that surprised them. A supplier going out of business, a border closing overnight, or a storm that made a factory stop working could have all happened. These times show how weak the supply chain management systems can be, even when they appear resilient.
Things like the pandemic lockdowns, climate events, geopolitical shocks, inflation, and unstable markets have made stress build up over the past few years. Companies that survived these storms didn’t just get lucky; they planned for them and made their businesses more resilient.
Being truly resilient doesn’t mean keeping every possible problem from happening. That can’t happen. It’s about building systems that can handle shocks, adapt quickly, and recover faster than the competition.
Research shows that companies that are good at managing risk can get back on track faster and for less money than those that aren’t ready.
This guide shows you how to use procurement technology to build resilience, which makes it easier to deal with supply chain risk.
Step 1: Draw a Map of All of Your Suppliers
You can’t keep something safe if you can’t see it. Many businesses know about direct (Tier 1) suppliers, but not much about Tier 2 and higher. It can take a while for a problem in the supply chain to get worse.
Use procurement platforms that let you see how different levels fit together. These tools show hidden dependencies, like when two companies share the same sources of raw materials, use the same logistics providers, are located close to each other, or have overlapping sub-supplier networks.
One car company thought it had diversified by getting semiconductors from eight different suppliers around the world. But a map showed that all eight relied on the same two raw material sources and three logistics providers. It seemed like there were a lot of different things, but there weren’t.
What to Do:
- Install software that can make maps of networks
- First, make a list of your Tier 1 suppliers. Then, work with them to find important sub-suppliers.
- Plan out where things are, what they depend on, and the risks of having too many of them in one place.
- Think of the network in a way that makes it easy to find weak spots.
Step 2: Set Up Real-Time Risk Monitoring
Quarterly reviews of risks are too slow for threats that are happening right now. Traditional assessments may not find out about money problems until it’s too late.
Continuous risk monitoring uses data streams from many sources, like financial data, news feeds, shipping logs, climate alerts, regulatory filings, and social media, to create dynamic risk profiles for each supplier.
For example, a pharmaceutical company’s monitoring tool noticed shipping delays and unclear messages from a key supplier six weeks before the supply shortage was made public. This company had already found other options while others were rushing around.
Things to Do:
- Combine monitoring of compliance, operational, financial, climate, and geopolitical areas
- Set up alerts and thresholds that help you find problems quickly without too much noise.
- Create escalation workflows for each level of severity.
- Create dashboards that show risk for all suppliers.
- Improve the accuracy of sensor triggers over time to get better signals.
Step 3: Don’t Diversify in a Shallow Way; Do It Wisely
Dividing volume among many suppliers is not a real way to diversify. It makes sure that those suppliers don’t have any weaknesses that aren’t obvious.
Use analytics to find risks and dependencies that are the same. Check that your backup suppliers are qualified before a crisis. Even when you’re not doing anything, stay in touch with people. To keep their skills sharp, place orders from time to time.
Check that backups are really able to do their job by making sure that their capacity, quality, certifications, and lead times are all the same as those of the main suppliers. In theory, a lot of businesses think that backups don’t work in real life.
Things to Do:
- Use analytics tools to find suppliers that have the same level of risk
- Check out other suppliers ahead of time in important areas
- Place orders every now and then to keep backup suppliers interested.
- Write down the time frames and the ability to change things.
- Try out different switch scenarios to see what other options are possible.
Step 4: Scenario Planning & Stress Tests
What if your biggest supplier goes out of business, a region suddenly shuts down, or you can’t find a raw material? Scenario modeling lets you answer these questions before a crisis happens.
With procurement software, you can run “what-if” scenarios, like what happens if a supplier fails, a region is disrupted, or logistics fail. This shows that the system isn’t very strong, that there are hidden single points of failure, and that it makes assumptions about what will happen in an emergency.
A company that makes things for people found that all of its plans for recovering from disasters depended on stable financial and internet systems. In a real crisis, these systems all stopped working at the same time.
What to Do:
- Try problems in different areas and types.
- In those situations, try out your backup plans.
- Look for key failure points that don’t have a plan B.
- Make educated guesses about how long it will take to get better in different situations.
- Change how you react based on what you learned from the simulation.
Step 5: Encourage Important Suppliers to Work Together
Stress can cause transactional relationships to break down. Strong partnerships that are built on honesty and shared risk do much better.
Procurement platforms help people work together by giving them portals, shared forecasts, joint planning, and ways to talk to each other. If your suppliers know what you need and what you can’t do, they are more likely to help you when you need it.
When performance metrics are clear and fair, people can trust each other. Suppliers feel less threatened and more in line when they know how they are being measured.
What to Do:
- Set up supplier portals for key partners
- Make it easy to share predictions about demand and capacity.
- Make plans with suppliers to lower risks.
- Make it easy for people to talk to each other if there is a problem.
- Invest in supplier development to strengthen the network.
Step 6: Make Rules for How to Respond and Who Is in Charge
When things go wrong, it’s better to be quick than perfect. Before a crisis, you need to know exactly how to escalate problems and make decisions.
Procurement software can automate things like starting backups, sending orders to the wrong place, moving inventory around, or changing logistics based on rules. Governance needs to find a way to balance speed, oversight, and accountability.
What You Should Do:
- Write down what to do when things go wrong.
- Give each level of escalation the power to make decisions.
- Plan ahead for automatic answers to common problems.
- Set up crisis teams with people from different departments and clear roles.
- Do drills on a regular basis to see how well the rules work.
Step 7: Learn, Measure, and Try Again
You can learn from every mistake you make. Make a note of what worked, what didn’t, and why, and then put those lessons back into your system.
Procurement platforms keep track of events, choices, outcomes, and timelines. Patterns that show up in a lot of events point to problems in the system that aren’t clear when looking at just one case.
Companies that are resilient don’t see resilience as a one-time project; they see it as a skill that can be learned and improved over time.
What to Do:
- After big events, do after-action reviews.
- As resilience metrics, keep an eye on how long it takes to recover, how much it costs, how quickly suppliers respond, and how happy customers are.
- Tell other teams what you’ve learned.
- Change risk models and backup plans based on what you know from real life.
- Put money aside for improvements to resilience that will last.
Why Technology Makes This Possible
It’s not possible to handle risks by hand on a large scale. People can’t handle the amount of data, the need for constant monitoring, the complexity of scenarios, and the need for speed.
Finding, analyzing, modeling, and responding are all done automatically by procurement software. It makes the whole company stronger, which lets procurement teams focus on strategy and building relationships.
As more businesses go digital, only those with integrated risk systems and networks that can respond quickly will be able to stay competitive.
Building Tomorrow’s Resilient Supply Chain, Today
There will always be problems, and they might get worse or happen more often. But they don’t have to become crises.
This seven-step plan will help you build supply chains that can handle shocks, change quickly, and come back stronger. Companies that actively invest in learning, working together, responding, planning for different scenarios, keeping an eye on things, being open about what they do, and diversifying will do better than those that only react.
It takes time to build resilience, but every step you take makes you better able to deal with difficult situations.
GEP’s research and insights on the future of procurement can help you learn more about procurement that is resilient.
Questions That Come Up a Lot
What sets procurement software apart from an ERP system?
ERP systems do a lot of things, such as manage finances, human resources, and operations. They also include basic buying. Strategic procurement software has more tools than ERP modules. For example, it has multi-tier mapping, continuous risk monitoring, simulation, supplier collaboration, and predictive analytics.
How long does it usually take to get better at handling risk?
It takes three to six months to set up basic features like mapping suppliers and basic monitoring. It usually takes 12 to 24 months to fully develop resilience, which includes things like working with suppliers, diversifying, and planning for different scenarios. And resilience is never “finished”; it needs to change.
Can smaller businesses also make supply chains that are less likely to break down?
Yes. Cloud and SaaS procurement platforms let medium-sized businesses use advanced risk tools. In fact, smaller businesses often need resilience more because they don’t have as much room to deal with shocks and don’t have as many resources in an emergency.
How can you tell if your supply chain can handle issues?
Keep an eye on leading and lagging metrics like risk exposure scores, supplier concentration indices, time to recovery, the financial impact of disruptions, and how well customers do when they are under stress. To check resilience, look at the results of the scenario test and see how they match up with what really happened.
What risks should procurement teams deal with first?
First, check your suppliers’ finances, how much they rely on other suppliers, the risk of being in a different part of the world, problems with logistics, changes in compliance, and cyber vulnerabilities. As you get older, you should add climate, regulation, ESG, and reputational risks to the list.
