Sphera's research, which takes into account insights from CPOs and CSOs, reveals a concerning lack of transparency beyond Tier 1 suppliers.
Amid geopolitical conflicts, complex regulations and uncertain supply routes, Sphera's latest report underscores the vulnerabilities plaguing many current supply chains.
As companies navigate choppy waters, the findings highlight a pressing need for critical appraisal of visibility across their networks.
Limited transparency
Sphera's research, which takes into account insights from 500 senior leaders including Chief Procurement Officers (CPOs) and Chief Sustainability Officers (CSOs), reveals a prevalent lack of transparency past Tier 1 suppliers.
While connections at the Tier 1 level are often robust, subsequent layers—comprising Tier 2, Tier 3, and Tier 4—lack visibility.
This reluctance primarily stems from suppliers' unwillingness to disclose data regarding their upstream networks. Consequently, the main buyers struggle to gain insight into these deeper layers of the supply chain. These tiers, though not directly linked to the buyers, supply essential components to Tier 1 suppliers.
The deficiency in N-Tier visibility impairs businesses' ability to spot weak points, which are crucial in pre-empting issues like supplier insolvency or regional disruptions. The study highlights that a staggering 85% of supply chain risks and significant events arise from these sub-tier suppliers.
Paul Marushka, CEO and President of Sphera, notes: "When disruptions hit, businesses need options. Firms with limited visibility into their supply chain have risks and exposures stemming from sub-tier suppliers who may be vulnerable to disruptions.
"Sphera’s N-Tier survey results demonstrate the importance of comprehensive supply chain mapping. Companies with a proactive approach can successfully weather the storm of any supply chain disruption.”
Inadequate data hinders risk management
The challenge of poor data quality is a significant barrier for companies striving to track sub-tier suppliers.
Sphera finds that 70% of organisations describe the data from these tiers—from Tier 2 to Tier 4—as flawed or unreliable. Such data issues severely compromise risk management and decision-making processes.
Without dependable information, even advanced systems fall short of providing true supply chain resilience. Despite technological advancements, a quarter of those surveyed still rely on manual risk assessments, which invite human error and oversight vulnerabilities.
Furthermore, many businesses resort to inadequate tools not designed for the complexities of modern supply chains, leading to fragmented systems where technology fails to deliver actionable insights.
A pillar of resilience
Growing pressure on global supply networks is further compounded by geopolitical dynamics, climate change and regulatory changes such as the Corporate Sustainability Due Diligence Directive (CSDDD) and EU Deforestation Regulation (EUDR). These factors have intensified the complexity of supply chain management.
Significantly, nearly half of the companies which participated in Sphera's survey prioritise N-Tier visibility beyond mere regulatory compliance reasons; they also consider it essential for risk mitigation, operational continuity and protecting their reputation.
The insight derived from the survey reflects a transition from a reactive to proactive resilience-building strategy regarding supply chain management. Forward-thinking companies recognise the necessity of comprehensive supply chain mapping to foresee and prepare for potential disruptions.
Sphera's findings point to an increasing acceptance that investing in technology and cultivating deep supplier collaboration is critical for creating resilient supply chains.
Enhanced systems and robust data management enable businesses to map their entire supply networks, identify emergent threats, and bolster preparedness against disruptions.
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