Supply Security in Procurement: The Essence of a Robust Supply Chain
In the context of procurement, supply security is an important concept for keeping a company’s business running. With the Supply Chain Due Diligence Act and the CSRD, it is becoming increasingly important and has become a fundamental principle in procurement. But what does this term actually mean? And why is it so crucial for uninterrupted production?
Security of Supply: The Cornerstone of Smooth Procurement
Supply security ensures that the required materials and goods are delivered to the right place at the right time, in the agreed quantity and quality. This is crucial in procurement, as a continuous supply of raw materials and resources forms the basis for seamless production.
Resilient and sustainable supply chains have their origins in procurement and supplier management. Supply security is, therefore, the pillar of robust and reliable procurement that guarantees the company’s success.
Why Companies Should Strive for Security of Supply
In our annual study, which provides an up-to-date picture of the procurement agenda of SMEs and uncovers optimization potential, we found that SMEs have had a clear focus on securing supply since 2021. This aspect has the strongest influence on the organization of procurement and supply chain processes. In fact, 96% of respondents consider securing supply and, thus, supply security to be the predominant trend, especially against the backdrop of current crises.
The reasons for this shift in focus and why companies should expand their supply security are diverse:
- Production downtime: Late or missing deliveries can lead to costly production downtime. A high level of supply reliability ensures that the required materials are available on time to avoid production disruptions.
- Storage costs: High stock levels tie up capital but offer security in the event of delivery failures. Optimized stock levels can improve delivery reliability and lead to lower storage costs and a higher return on investment.
- Planning: A reliable supply chain enables more precise production planning and supply chain management, allowing resources to be used more efficiently and responding more flexibly to market changes.
These factors set the scene for effective risk management, which is a proactive measure against supply chain disruptions. Supply security thus plays a decisive role in aligning procurement with resilience, crisis management, and future security by minimizing risks early.
What Jeopardizes Supply Security?
Ensuring 100% supply security is always a challenge, as the supply chain is subject to numerous external influences beyond our control. The recent global pandemic has clearly demonstrated how easily supply chains can be disrupted while current geopolitical crises continue to cause further disturbance. Economic factors such as price rises due to inflation and the transition to renewable energy have also caused adverse effects.
The previously highly praised concept of the just-in-time supply model carries specific risks as it does not provide a buffer for unforeseen disruptions. Companies are also obliged to carefully monitor their suppliers, not only for their reliability but also for their adherence to corporate social responsibility (CSR) and the achievement of ESG (environmental, social and governance) goals. This is crucial for responsible procurement.
Consequently, the supply chain is subject to continuous risk management, which must always be considered in procurement.
Tips for Minimizing Disruptive Factors in the Supply Chain and Ensuring Supply Security
To minimize disruptive factors in the supply chain and ensure supply security, it is important to remain flexible and take various measures. Here are some tips to make your procurement processes crisis-proof and resilient:
- Early demand forecasting: By conducting a comprehensive analysis of spend, procurement history and production planning, companies can gain valuable insights to predict demand accurately. This enables them to take timely action to avoid bottlenecks and ensure a smooth supply.
- Efficient supplier network: Choosing an efficient supplier network is a decisive factor for the success of a company. A lean supplier network offers clear advantages through simpler administration and closer relationships with suppliers. This not only…
