Streamlining Supplier Risk

Confidential to Apple Inc Company

Watch Ltd

“Streamlining Supplier Risk”Data Feeds and Systems Integration

eWorld Purchasing & Supply ConferenceLondon, 4 March 2014

John A. Smith – Client Relationship Director Company Watch

“Hindsight in Advance”

Northern Rock: September 2007

Lehman Brothers: September 2008

Halifax Bank of Scotland: September 2008

The Royal Bank of Scotland: October 2008

When Did It All Start?

Construction Index

IPOs

House building

Unemployment figures

Inward Investment

When Will It All End?

One “R” word for another

Recession

Recovery

Recovery Kills!

Businesses are now leaner, meaner and

hardened, BUT

They are more at risk emerging from a

recession

The Major Risk is:

Overtrading…….

Pressure on finances, staff and systems

Supply Chain/Procurement Teams should

be reviewing their key suppliers NOW

Changes

Europe

USA

China

Emerging markets

MINT countries: Mexico, Indonesia, Nigeria

and Turkey

Changes

More Government cutbacks

Thursday, 7th May 2015 – Election Day

The banking industry

Regulations

Europe Referendum

Changes

Skills levels available

Your competitors

Zombie companies

Energy costs

Social media

Changes

Technology advancements

Supply chain responsibilities

Customer responsibilities

Fraud

One Result is…..

More data, information…..

“NOISE”

You Need

Better and more timely

information…..

.….with a growing need for mobile

applications across an organisation

You Need

To streamline and automate

processes to improve efficiency

whilst maintaining stability

“Big Data”

Master Data Management/Data Governance

Data and systems integration

Better quality and more focussed business

intelligence - rather than just data

Single view of a customer/supplier

“Users”

Finance

Marketing and Sales

Credit

Operations

Purchasing/Procurement ??

Two Data Delivery Systems

Browser - direct to users

Data Feeds and APIs (Application

Programming Interfaces)

- direct to users’ systems/computers

Data Feeds and APIs

Bulk

On Demand

Different Payloads

Raw Data

Standard Analytics

Bespoke Analytics

Reports

Charts

CONTRACT CHAIN

COMPANY B£ 150 M

COMPANY C£200 M

COMPANY D£ 250 M

Company m £25 MCompany n £25 MCompany X £20 M

.

Company p £40 MCompany q £40 MCompany X £25 M

.

Company r £70 MCompany s £60 MCompany X £30 M

.

Company t £80 MCompany u £80 MCompany X £35 M

.

.

YOUR COMPANY

COMPANY A£ 100 M

How good are your analytical tools?How good are your analytical tools?

Forward looking

Flexible

Stress-testing & forecasting

Reliable

Give Yourself The Tools To Discriminate

HIBU PLC

Early WarningsSILVERDELL PLC

Early Warnings EDS Group Holdings Limited

Early WarningsConstar International U.K. Limited

Early Warnings2E2 HOLDINGS LIMITED

An indication of how often you are likely

to lose money

Does your ratings provider split up their

success rate by country/business type?

If not, why not?

Can I update the rating if I get

management accounts?

Question 1 – What percentage of companies which failed were flagged up as risky?

Question 2 – What percentage of companies are in your Warning Area or equivalent?

A big warning area decreases the amount of

defaults/failures which are missed, but decreases the

amount of business you can do.

Don’t Be Complacent –

You Need Tools You Can Trust?

Quantity ≠ Quality

Cheap ratings are a false economy

£280 Million debtLess than 7p per pound

Recovered

Is the rating overly sensitive to a particular

input?

Has the company reallocated which SIC code it

files under?

Question 4 – How Stable Are Your Ratings?

Looking Forward: Stress testing & forecasting

Looking Forward: Stress testing & forecasting

You need to be prepared for the

insolvencies of the coming two years

Make sure you have a rating system that

you trust

Separate the zen from the toys!

Confidential to Apple Inc Company

Watch Ltd

Come and talk to us on Stand 15

John A. Smith – Client Relationship Director

[email protected]