How effective are you at managing supplier risk and purchasing strategically?

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How effective are you at managing supplier risk and purchasing strategically?

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  • Introduce concept of risk based approaches (e.g compliance) – PROPORTIONATERisk should be a pervasive consideration at all time during supplier life cycleNot about preventing you acting, but acting in an informed manner by fully appreciating risks involved with a supplier of partnerLots of elements of procurement risk – at BvD we’re focused on harnessing external company information to help you manage financial and reputational risk. What information is available, how can you blend it with your own data, and how do you use it to enhance your supplier relationship management?
  • Mentioned earlier there’s a multitude of aspects to risk within procurement – where we focus is: 1 – Financial i.e. impact on your bottom line based on supplier health / failure and non-delivery / short-term reactionary sourcing from a weakened bargained position 2 – Reputational i.e. impact on your bottom line based on reports in the press, damages to your brand integrity and conducting business with people you shouldn’t be… And then having done that options to integrate these into existing workflow processes….We all know it can be easy to run a risk score on a supplier but then building this into the fundamentals of a process, which is repeatable, transparent and leads to tangible business results
  • Mentioned earlier there’s a multitude of aspects to risk within procurement – where we focus is: 1 – Financial i.e. impact on your bottom line based on supplier health / failure and non-delivery / short-term reactionary sourcing from a weakened bargained position 2 – Reputational i.e. impact on your bottom line based on reports in the press, damages to your brand integrity and conducting business with people you shouldn’t be… And then having done that options to integrate these into existing workflow processes….We all know it can be easy to run a risk score on a supplier but then building this into the fundamentals of a process, which is repeatable, transparent and leads to tangible business results
  • Turn your data into an Asset not a headache!If you have SRM platforms then consider how refreshers of accurate, insightful business intelligence can enhance your approach to risk management and mitigationSimilarly, at the other end of the scale, if you’ve inherited weak inconsistent data sets from M&A, ERP reporting then you need help to standardise, cleanse and then enrich some of that contentBUT – once that link is created, that headache of maintaining accurate data on those suppliers can be soothed, if not totally taken care of foreever….May have to mention matching….certain amount of process attached to creating that link but its something a good provider should be competent in and be able to offer some valuable advice on
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • Classic view of portfolio segmentation, a challenge that a had recently with a client was, well we can address the supply risk piece here, and we have some idea of financial risk in terms of spend, and their importance in our supply chain… BUT – we have no understand of their stability / health which is clearly relevant to both axis…If you have a single source, critical supplier which is integral to production then understand their performace / health That point is that external can help with the classification and on-on-going management of strategic suppliers, and as we’ll see next
  • How effective are you at managing supplier risk and purchasing strategically?

    1. 1. How effective are you at managing supplier risk and purchasing strategically? Ted Datta Strategic Account Director BvD UK & Ireland
    2. 2. 1. What are the current challenges…. …facing the procurement industry …and, the procurement professionals we know 2. Let’s focus on risk 3. Answering the “so-what” question…
    3. 3. Familiarity with global supply chains
    4. 4. Responsibility to source ethically
    5. 5. Pressure to deliver value
    6. 6. SMEs continue to struggle across Europe 30,719 entered receivership in the last 2 weeks 11,371 manufacturing, construction, logistics, telecoms 520 + 50 employees +7% vs LY
    7. 7. What are our clients saying? “we need to harmonise risk scorecards with our credit insurers and finance systems…” “we need to source in emerging markets and understand the risks involved…” Leading car manufacturer “our buyers don’t have time to waste trawling the net for information on suppliers…”
    8. 8. What are our clients saying? “we need to stop creating duplicate suppliers, it’s wasting time and money…” “I’m sure we could be leveraging our buying power more effectively…” Global logistics provider “if our suppliers don’t deliver, it’s our reputation at stake…”
    9. 9. Let‟s focus on risk “The effect of uncertainty on objectives” Source: ISO “25% of procurement functions have only a basic level of maturity around risk management” Source: KPMG
    10. 10. What can business information help with? 1. Financial risk – “continuity of supply” 2. Structural risk – “stability & sustainability” 3. Reputational risk – “ethical credentials”
    11. 11. 1. Financial risk: traditionally boiled down to this…
    12. 12. 1. Financial risk: but the world has changed…
    13. 13. 1. Financial risk: a broader perspective Propensity of bankruptcy Environmental risk Probability of default Peer group stability
    14. 14. 1. Financial risk: compare multiple ratings
    15. 15. 2. Structural risk: predicting supplier behaviour Lifestyle / Family vs. Multi-national / Private Equity
    16. 16. 2. Structural risk: reality behind the „company façade‟
    17. 17. 2. Structural risk: reality behind the „company façade‟
    18. 18. 3. Reputational risk: sourcing a new strategic partner?
    19. 19. 3. Reputational risk: but who are you actually buying from?
    20. 20. 3. Reputational risk: media monitoring Negative Positive
    21. 21. Answering the “so-what?” question… “…the success of commercial intelligence as a business tool can be directly related to two critical factors…” 1.Relevance of information to the procurement individual 2.Ease of use
    22. 22. Clean your supplier data Internal data Common identifier External data Inactive suppliers Duplicates records
    23. 23. Blend it with external data
    24. 24. Making it relevant Management Dashboards Category Analysis Buyer Reports
    25. 25. Visibility of critical risks
    26. 26. Impactful reports for buyers
    27. 27. Information that drives cost savings How important is our business to theirs? Are we leveraging our total spend across their group?
    28. 28. Measure effectiveness Alerts Actions
    29. 29. Develop your “toolkit”
    30. 30. Insist on proper training and support
    31. 31. Stand 12

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