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The Supply Chain Risk Paradigm Shift

Global supply chains face unprecedented challenges in 2025. The Hackett Group’s 2025 Procurement Agenda and Key Issues Study provides essential Supply Chain Risk Insights, confirming that ensuring supply continuity remains a top priority, ranking second overall for the second consecutive year. This persistent focus reflects an ongoing reality: supply disruption now represents an existential risk for many organizations.

The impact of recent tariff changes, such as the US Liberation Day tariffs, further complicates an already challenging landscape and represents just one example of the geopolitical forces reshaping global supply chains.

The Current State of Supply Risk Management

The Hackett Group’s study provides valuable insights into how organizations are addressing supply risk:

Risk Management Priorities

Supply continuity ranks as the second most important procurement objective
Strengthening third-party risk management visibility and capability ranks 10th
Supply chain resilience is identified as the sixth most important transformational trend

Technology Adoption

81% have deployed supply risk management solutions
76% plan further investments in these technologies over the next three years
Only 40% currently have dedicated risk management teams, though 17% plan to establish such teams

Analytics Capabilities

61% use at least diagnostic analytics for supply risk
18% have advanced to predictive analytics
14% have implemented prescriptive analytics capabilities

These statistics reveal both progress and significant opportunity. While most organizations have implemented basic risk management capabilities, few have developed the advanced analytics and specialized teams needed to fully address supply continuity challenges.

The Liberation Day Tariff Impact

The implementation of Liberation Day tariffs exemplifies the type of policy shifts that create significant supply chain disruption. These tariffs, which increased duties on wide ranging imports, required rapid assessment and response from procurement organizations.

According to research from Kearney, such tariff changes typically trigger several waves of supply chain impact (Source: Kearney):

Immediate Price Impact – Direct cost increases for affected categories
Secondary Supply Shifts – Changes in sourcing patterns as suppliers adjust
Market Restructuring – Longer-term shifts in global supply networks
Policy Response Cycles – Retaliatory measures and policy adjustments

Organizations with advanced risk management capabilities were better positioned to navigate these waves, identifying exposure quickly and implementing mitigation strategies ahead of competitors.

Beyond Reactive Risk Management

The Hackett Group’s study reveals a critical evolution in supply risk management approaches. While traditional risk management focused primarily on reacting to disruptions, leading organizations are now building comprehensive risk resilience programs that:

Proactively Identify Risks – Using advanced analytics to anticipate potential disruptions
Quantify Impact – Assessing the financial and operational implications of various risk scenarios
Implement Mitigation Strategies – Developing and deploying targeted risk reduction approaches
Monitor Continuously – Maintaining real-time visibility into emerging risks
Respond Rapidly – Activating predefined protocols when disruptions occur

This evolution aligns with The Hackett Group’s finding that 56% of organizations identify “the ability to address volatility, uncertainty, complexity, and ambiguity” as a key transformational trend.

Download Whitepaper: Supplier Risk Management Framework: A Comprehensive Approach to Mitigating Supplier Risks

The Zycus Approach: Comprehensive Supply Risk Management

Zycus has developed a comprehensive approach to supply risk management that addresses both immediate disruptions and long-term resilience. This approach encompasses several key components:

Multi-Dimensional Risk Assessment

Zycus’s solution evaluates suppliers across multiple risk dimensions:

Financial stability
Operational capabilities
Compliance status
Geographic concentration
Environmental and social governance
Cyber security posture

Continuous Monitoring and Early Warning

Rather than periodic assessments, Zycus provides continuous monitoring that:

Automatically tracks changes in supplier status
Alerts procurement to emerging risks
Identifies patterns that may signal future disruptions
Monitors news and external data sources for relevant developments

Risk-Adjusted Sourcing and Supplier Management

Zycus’s integrated approach ensures that risk considerations are embedded throughout the procurement lifecycle:

Incorporating risk factors into sourcing decisions
Building appropriate clauses into contracts
Monitoring supplier performance against risk-related KPIs
Implementing targeted risk mitigation plans

Download Whitepaper: Supplier Risk And Performance Management: Best Practices For KPI Creation

Scenario Planning and Simulation

Advanced analytical capabilities allow procurement teams to:

Model the impact of various disruption scenarios
Test different mitigation strategies
Quantify the cost-benefit of resilience investments
Optimize contingency plans

The Technology Enablers of Supply Continuity

The Hackett Group’s study highlights several important technology trends supporting supply continuity:

Intelligent Automation

53% have deployed generative AI solutions
30% use predictive AI for procurement applications
27% have implemented agile orchestration

Integrated Risk Platforms

81% have deployed supply risk management solutions
44% plan further investments in these technologies

Advanced Analytics

65% plan investments in advanced analytics
64% are investing in data marketplaces/feeds
61% use at least diagnostic analytics for supply risk

The Role of Merlin in Supply Risk Management

Zycus’ Merlin Agentic Platform plays a crucial role in enhancing supply continuity and risk management capabilities:

Proactive Risk Identification

Merlin’s intelligent agents continuously monitor both internal and external data sources to identify potential risks before they impact operations. This capability is particularly valuable for monitoring policy changes like tariff adjustments, where early awareness can provide critical response time.

Automated Impact Assessment

When potential disruptions are identified, Merlin can quickly assess the impact across the organization’s supply network, identifying affected categories, suppliers, and business units. This allows procurement teams to prioritize their response efforts based on business criticality.

Orchestrated Response

Merlin can coordinate the organization’s response to supply disruptions, automatically initiating contingency plans, notifying stakeholders, and tracking resolution progress. This orchestrated approach ensures consistent, efficient response even to complex disruptions.

Continuous Learning

Perhaps most importantly, Merlin learns from each disruption event, continuously improving its risk identification and response capabilities. This creates a virtuous cycle where the organization becomes progressively more resilient to supply disruptions.

Building a Supply Continuity Program

Based on The Hackett Group’s findings and industry best practices, here’s a strategic roadmap for enhancing your supply continuity capabilities:

Risk Exposure Assessment

Conduct a comprehensive review of your supply network to identify key vulnerabilities and dependencies. The Hackett Group’s study shows that 81% of organizations have implemented supply risk management solutions that can support this assessment.

Technology Foundation

Implement the technology capabilities needed to monitor and manage supply risk effectively. The study reveals that 76% of organizations plan further investments in these technologies over the next three years.

Process Integration

Embed risk considerations throughout your procurement processes, from supplier selection to performance management. Leading organizations are creating dedicated risk management teams (40% currently, with 17% planning to add them).

Capability Development

Build the specialized skills required for effective risk management, including analytics, scenario planning, and rapid response. The study shows analytics as the most common COE capability (67%).

Supplier Collaboration

Engage key suppliers in joint risk management efforts that enhance visibility and resilience. The study reveals growing investment in supplier collaboration platforms (57% adoption).

Continuous Improvement

Regularly test and refine your continuity plans through simulations and actual event reviews. Organizations with more mature capabilities are moving to predictive (18%) and prescriptive (14%) analytics for supply risk.

Policy Impacts: Navigating Tariff Changes

Download the Executive Guide: Navigating the New Tariff Landscape: Strategic Imperatives for CPOs in 2025
The Liberation Day tariffs provide a case study in how procurement organizations must respond to policy shifts:

Impact Assessment Phase

When new tariffs are announced, procurement must quickly:

Identify directly affected suppliers and categories
Quantify the immediate cost impact
Assess secondary effects on market dynamics
Evaluate supplier response capabilities

Response Strategy Development

Based on this assessment, procurement then develops appropriate responses:

Direct negotiation with affected suppliers
Exploration of alternative sourcing options
Product specification adjustments
Inventory strategy modifications
Contract clause activation

Long-Term Resilience Building

Beyond the immediate response, organizations should:

Diversify supply sources across geopolitical boundaries
Build flexibility into supply contracts
Develop alternate manufacturing capabilities
Create early warning systems for policy changes
Simulate responses to future scenarios

The Future of Supply Continuity

Looking ahead, several trends will shape the evolution of supply continuity practices:

AI-powered risk Intelligence

Artificial intelligence will increasingly identify subtle patterns that signal emerging risks, allowing earlier intervention. The Hackett Group’s study shows 53% of organizations have already deployed generative AI solutions.

Digital Supply Networks

Traditional linear supply chains will evolve into dynamic networks with greater transparency and flexibility. This aligns with the finding that digital procurement and automation ranks as the #1 transformational trend.

Circular Supply Approaches

Organizations will reduce disruption risk by developing more circular supply models that decrease dependence on virgin material sources. The study shows sustainability ranking as the seventh most important priority.

Collaborative Ecosystems

Risk management will increasingly extend beyond organizational boundaries to include coordinated efforts across supply networks. Supplier collaboration platforms are growing in adoption (57% currently implemented).

Securing Your Supply Chain

As you develop your supply continuity strategy, consider these key takeaways:

Supply continuity remains a top procurement priority for 2025
Policy changes like the Liberation Day tariffs create complex, multi-wave disruptions
Leading organizations are moving from reactive to proactive risk management
Advanced technology and analytics are critical enablers of supply resilience
Risk management must extend beyond organizational boundaries to be truly effective

Learn More About Supply Risk Management

To gain deeper insights into the supply continuity trends shaping procurement, download the complete Hackett Group 2025 Procurement Agenda and Key Issues Study.

Discover Zycus’s Supply Risk Management Solutions

Explore how Zycus’s comprehensive risk management capabilities can enhance your supply continuity. Speak with our solutions experts today.

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