Today I’d like to welcome back Jim Lawton, VP and General Manager of Open Ratings, a D&B company, back for a follow-up on his Five Types of Supply Risk piece and the role of information and technology in risk mitigation.
Let’s face it – the single best way to reduce your exposure to risk introduced by suppliers is to know them. And I mean really know them. For any of the five types of risk we identified last time, it means having insight well beyond what you track today. Not only how much they cost you, but also how much they cost your competitors – and how well they perform for your competitors. It means knowing about everything from EPA and OSHA violations and changes in their leadership to their growth plans and whom else they do business with.
Some great sources of information into just how well your suppliers are doing, include things like:
- Real estate transactions
- Legal actions
- ITAR filings (esp. in the case of dealing with overseas suppliers)
- SEC filings
- Tax returns
At its worst, it means knowing things about them that they aren’t likely to tell you. So you need to go out and find it.
Sure. Given the likely state of your procurement operations – more suppliers, not less –
in spite of rationalization; suppliers 12 time zones away operating in countries with much more lax reporting regulations and fewer resources to actually manage all of this, odds are good that right now you are asking “how much time does this guy actually think I have to spend investigating every little bit of data and figuring out if it matters to me!?!”
The good news is that you don’t have to do. Technology makes it possible. Think about it: Intelligent systems are everywhere. Your car tells you when it needs service and books an appointment at the dealer; your GPS system gives you an up-to-the-minute way to navigate out of a traffic jam; your house knows when you are home and turns the lights on just as you move into each room.
So why shouldn’t it be possible to apply smart solutions to make your life easier – and shrink the risk factor.
Today, data aggregation solutions are able to do what you would do, if you had the time: scan thousands of sources – regulatory agency sites, financial and credit reports, news releases, tax and real estate filings, competitors’ internal systems and much, much more. With a million documents on your desk, you’d pick out what matters and analyze it within the context of your own business. Using your years of experience and deep knowledge about the supplier, you’d decide to act on it if needed. You might switch suppliers or intervene to shore up a critical supplier.
Information, technology and you. Risk on the run. Life is good.