According to Amazon Business’s 2024 State of Procurement Report, almost nine out of ten companies struggle to achieve their supply chain sustainability goals - primarily due to challenges in identifying suppliers with sustainable practices [1]

This further reiterates the challenges of accurate risk assessment focused on supply chain, due to the difficulty of maintaining accurate, near real-time information about suppliers’ adherence to laws, regulations, and contractual obligations. This matters because unmanaged supply chain risk exposure can lead to severe operational disruptions, financial penalties, reputational damage, and legal liabilities.

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Breaking Down Barriers to Supply Chain Risk Management

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1. Fragmented and Outdated Supplier Data - Organizations often rely on multiple disconnected systems (ERP, risk intelligence, procurement systems etc,.) to track supplier information, leading to data silos and outdated records. Supplier updates frequently occur only at contract renewal or through manual processes, causing delays in detecting compliance issues such as regulatory breaches or financial instability.

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2. Lack of Visibility Across Extended Supply Chains - Many companies have limited transparency beyond their direct suppliers, struggling to monitor “Nth-party” suppliers and subcontractors. This lack of visibility makes it hard to identify non-compliance risks early, such as violations of environmental standards or labor laws, which can cascade upstream and impact the entire supply chain

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3. Complexity of Compliance Requirements - Suppliers must comply with a wide range of evolving regulations (e.g., ILO Conventions, GDPR, ISO 28000, ESG mandates, industry-specific laws etc). Ensuring suppliers understand and meet these diverse standards requires ongoing training, audits, and contractual enforcement, which are resource-intensive and difficult to scale globally.

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4. Dynamic Risk Environment - Regulatory landscapes and geopolitical conditions change rapidly. Without continuous monitoring and real-time data, organizations cannot promptly detect or respond to supplier non-compliance, increasing exposure to fines, sanctions, and operational interruptions.

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These barriers bring some key factors which make it hard to maintain the risk assessment including:

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• Data Integration Challenges: Supplier data is scattered across multiple platforms and formats, complicating aggregation and analysis in real time.
• Manual and Infrequent Updates: Supplier information is often updated manually or only during periodic reviews, missing timely signals of non-compliance or risk
• Resource Constraints: Conducting frequent audits, training, and monitoring across a large supplier base requires significant investment and coordination.
• Supplier Reluctance or Lack of Transparency: Suppliers may withhold information or lack the systems to report compliance status promptly, hindering proactive risk detection.

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Transforming Supply Chain Risk Challenges into Opportunities with AI

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These challenges further necessitate the use of AI and automation to revolutionize supply chain risk management. SageX AI for Supply Chain Risk Management is one such step in the direction with our partner, METIS. Leveraging advanced AI, we integrate diverse data sources-including vendor documents, policies, controls as the source data to deliver near real-time risk assessments in minutes. This continuous, automated risk monitoring reduces the need for costly manual audits while empowering businesses to achieve near real-time visibility, make proactive decisions, and build resilient, sustainable supply chains that meet evolving regulatory demands and stakeholder expectations. This approach not only mitigates operational and reputational risks but also positions companies as leaders in responsible supply chain management - one of the key levers in the broader transformation and growth for organizations.

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References: [1] https://business.amazon.com/en/work-with-us/enterprise/state-of-procurement-data-report-2024

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