Daily Archives: February 13, 2007

OpenRatings … Not Just for Performance Anymore

Recently, I had the opportunity to sit down with Jim Lawton and talk about not what Open Ratings was, or is, but what it will be now that it has been acquired by D&B and has access to not only the cash reserves one needs to create the next big thing but also the data it needs to take its analytics capabilities to the next level.

As discussed many times by Jason Busch over on Spend Matters (link, link, link, and link, for example), and also by Jim Lawton in his guest post (link), Open Ratings had the unique capability, built on some great predictive analytics work by some brilliant MIT graduates (whom I hope to be talking to in the future), to analyze a supplier’s financial and performance data relative to other companies in your space and tell you how likely they are to perform for you with respect to a contract to provide a certain category of product or service.

Considering most companies don’t have the data or the models to even attempt this, this is a great offering. However, with access limited only to a subset of D&B data and customer data from the Open Ratings Network, the results were often coarse grained compared to the fine-grained event and product specific events a buyer would really like to have. Considering your only other hope for a coarse-grained result was Austin Tetra (whom I will also address this week), this was rather fantastic when the capability first came out – but one could see the next step and it only made sense to push for it – which they did, and now that they are part of D&B, I dare say that they can give you a performance-based picture of a potential supplier that, in some ways, is more detailed than any other picture any other provider can give you.

However, performance is not the only issue you need to be concerned about. In today’s ultra-fast marketplace with ultra-lean supply chains, Risk is King. It’s not how good the supplier will perform, but how regularly they will perform. The last thing you want is for a great performing supplier to go bankrupt without warning nine months into a new contract. The real question is, with their new access to D&B’s huge data store, updated daily, will they be able to tell you not only how well a supplier can be expected to perform, but how risky the relationship could be be. After all, the real key to managing risk in your supply chain, is, of course, to not introduce it in the first place!

So, on this note, I’m going to end this post and ask you to stay tuned for tomorrow’s post where Open Rating’s Jim Lawton guest authors a post on the five major types of risk and what you can do to hedge against them. Keep the feed alive!