New research from the Institute for Supply Management (ISM) and Amazon Business shows organisations are increasingly balancing cost and resilience in their procurement strategies, but many still lack the technology, visibility and preparedness needed to respond effectively to supply chain disruption.
Organisations are placing greater emphasis on balancing cost efficiency with supply chain resilience, but many remain ill-equipped to respond to ongoing disruption, according to new research from the Institute for Supply Management (ISM) and Amazon Business.
The study, based on a survey of 425 global supply chain professionals, found that 71 per cent of organisations now consider balancing cost and risk to be a core procurement strategy. However, only 45 per cent believe they are prepared to manage supply chain disruptions.
The findings, published in the white paper Balancing Cost and Risk: An Operating Model for Supply Chains, highlight a growing disconnect between strategic priorities and operational execution.
The research found that 65 per cent of organisations continue to rely on manual reporting to collect supply chain data, restricting visibility and slowing decision-making during periods of disruption.
“Organisations today are operating in an environment where disruption is no longer an exception. It is an ongoing reality,” said Debbie Fogel-Monnissen, Interim Chief Executive Officer, Institute for Supply Management.
“Leaders recognise the need to balance cost with resilience, but our research shows many are still building the capabilities to act on that insight. Closing that gap is essential to protecting performance and ensuring continuity.”
Technology adoption remains uneven
While digital procurement tools are becoming more common, the report suggests many organisations have yet to adopt more advanced technologies needed to improve resilience.
E-procurement platforms are used by 58 per cent of respondents, while 51 per cent have implemented supplier portals. However, technologies such as predictive analytics and advanced risk monitoring remain significantly less widespread.
Similarly, although 64 per cent of organisations use business impact analysis to assess supply chain risk, fewer have adopted more sophisticated approaches such as risk matrices (49 per cent) and scenario planning (46 per cent).
The report also found that cybersecurity has become the leading supply chain risk concern, reflecting the increasing importance of digital resilience alongside traditional risks such as supplier financial health and product quality.
According to the research, businesses are strengthening resilience by focusing on supplier diversification, improved risk management and cost optimisation.
Long-term supplier contracts remain the most widely used cost management strategy, adopted by 71 per cent of organisations, while larger enterprises are also using pricing and hedging strategies to manage uncertainty.
The report suggests organisations are increasingly adopting a total cost of ownership approach, incorporating service performance, operational efficiency and disruption exposure alongside purchase price when making sourcing decisions.
The research identifies four practices that will underpin the next generation of resilient supply chains:
According to the report, organisations that successfully align strategy with execution by improving data visibility, adopting advanced technologies and enabling faster, more coordinated decision-making will be better positioned to manage future supply chain disruption.
