Know your suppliers? How can you manage supplier risk?

How can you manage supplier risk?

Dan White

Regional Sales Director

BvD UK & Ireland

Risk – it’s not a new issue?

UK companies liquidated or placed into receivership in the last two weeks

1,730

90 of those had more than 50 employees

What is procurement?

“Increase quality whilst reducing cost and avoiding risk.”

1. Financial risk

2. Reputational risk

3. Incorporating risk measures into your workflow

Risk: If I do this is it going to hurt?

Supply chains are vital to the successful performance of a company

Deliverables against margin means procurement teams are increasingly concerned with risk and ways to identify it

It’s not as simple as “I buy goods from supplier A”

To make it’s product supplier A buys from supplier C, D and E

Identification of risk is a challenge

Difficult to obtain an accurate & reliable picture of the financial health of a supplier

Procurement professionals are not always financial analysts

Where do I get data from? What does it mean?

The right data from the right external provider can help

The right data from the right external provider can help…

Initially many external providers look

the same

External content providers

Global

Quality content

Easy to interpret

Varied content

We engage with many procurement teams….

Good procurement teams seem to be agile when it comes to identifying risk

Make technology work for them

The world had changed….

What are the alternatives to help me see risk?

1. Financial Risk: New approaches to “see” risk

Not moving away from traditional methods but what else is out there

New companies have evolved who take a different view on risk

Help procurement teams see the bigger picture of supplier ……

Financial Strength: A wider view

Better to have several risk indicators than just one

Key supplier – multi-million construction project

Basic credit score tells us this company is healthy

All is not well…..

Different suppliers required different approaches

Key strategic suppliers

Indirect suppliers

Don’t forget the real world

Good providers of external content should bring other “warning” signs of risk

News

Adverse documents

Should be easily deliverable into procurement teams

Information – knowledge - actions

2. Reputational Risk

“Increase quality whilst reducing cost and avoiding risk.”

Do I really know who my supplier is?

Child labour & other such undesirable activity

Links to criminal activity (proven or unproven)

Bribery or corruption (alleged or proven)

Reputational Risk: Who are you working with?

How do we understand reputational risk?

Aggregated content of

Sanctions lists

Enforcements

Adverse media coverage

3. How can we use external content?

Create a link ….

Internal data

Externally managed data

Common identifier

You’ve made the link…

…it’s your gateway to knowledge

Help me see risk early

“Increase quality whilst reducing cost and avoiding risk.”

Decline in

Credit score

Adverse documents

Negative press

Where’s the risk in my supply chain?

“Increase quality whilst reducing cost and avoiding risk.”

Where does my supplier fit?

“Increase quality whilst reducing cost and avoiding risk.”

Connect to valuable intelligence

“Increase quality whilst reducing cost and avoiding risk.”

Successful procurement teams use external data to:

• Identify risk• Take steps to prevent risk• Enrich knowledge

“Increase quality whilst reducing cost and avoiding risk.”

Please do visit us on stand 7