Enhanced Supplier Due Diligence: Implications for Sourcing and Risk Management
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This document discusses the need for enhanced supplier due diligence and risk management. It notes increasing regulatory pressures from the UK government, EU, and other bodies requiring companies to better know their suppliers to avoid issues like money laundering, modern slavery, and sanctions violations. It then describes a case study of a large multinational corporation that developed a supplier risk model to efficiently risk-profile and monitor its global network of over 70,000 suppliers across 70 countries in response to new banking requirements. The model blended external data sources with internal contract data to identify and manage key risks. The document emphasizes the importance of a collaborative, risk-based approach to managing third-party supplier risk on a global scale.
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Enhanced Supplier Due Diligence: Implications for Sourcing and Risk Management
- 1. Ted Datta Channel Director – Risk Solutions BvD UK & Ireland Enhanced Supplier Due Diligence The implications for sourcing and supplier risk management
- 2. ‘It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.’ -Warren Buffett
- 3. Why now? Global data and supplier risk models A recent case study
- 4. UK Government: Corporate Transparency http://www.supplymanagement.com/news/2015/uk-government-spending-could-be-battering-ram-for-greater-corporate-transparency
- 5. European Union: Anti-Money Laundering http://www.pwc.lu/en/anti-money-laundering/publication-of-the-4-th-aml-directive.html
- 6. Modern Slavery: Know Your Suppliers https://www.gov.uk/government/news/pm-seeks-stronger-co-operation-with-vietnam-to-stop-modern-slavery-as-new-measures-come-into-force http://www.theguardian.com/world/2015/aug/10/lithuanian-migrants-chicken-catchers-trafficked-uk-egg-farms-sue-worst-gangmaster-ever
- 8. Enhanced Due Diligence . Source: Orbis report 12/08/15 http://www.bbc.co.uk/news/world-europe-26672800
- 10. Harmonising global market intelligence
- 11. How global is Global? Bureau van Dijk: Global Corporate Coverage (2015)* *Source: Orbis global coverage 10/08/15
- 12. What about emerging markets? 0 5000000 10000000 15000000 20000000 2010 2011 2012 2013 2014 2015 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 2010 2011 2012 2013 2014 2015 0 200000 400000 600000 800000 1000000 1200000 1400000 2010 2011 2012 2013 2014 2015 0 500000 1000000 1500000 2000000 2500000 3000000 2010 2011 2012 2013 2014 2015 >18.5 million companies* >12.5 million companies* >1.2 million companies* >2.6 million companies* *Source: Orbis global coverage 10/08/15
- 13. Market Intelligence Supplier Risk Profile Introducing supplier risk models.... Adverse Media Sector Business Age Owners & Directors Country Risk & Sanctions Financial Strength
- 14. De-risking a global supply chain against the clock Recent Case Study – Large Global Corporate
- 15. Background Strong brand, multi-national, manufacturer and retailer 70 countries world-wide, reliance on emerging markets
- 16. “What is a Sanction?” Banking license, new covenants: Supplier Sanctions Checks The Catalyst
- 17. Who was involved? Many stakeholders – HR, Treasury, Legal, Finance, Compliance ....buck stops with Procurement!
- 18. First Steps Supplier information audit – who? where? what? when? Data matching exercise
- 19. Model Development and Application Is it fit for purpose... “risk based approach”
- 20. Outcome Simple, scalable, supplier risk model
- 21. What’s next...? ...blend Internal Data with the model: - contract value - sole sourced vs. dual sourced - contract lifespan - consequences of failure
- 22. Three Key Takeaways Increasing regulatory pressure to Know Your Suppliers Availability of global data is improving in key markets Get set for a collaborative approach!