Webinar Notes: Leveraging Information to Develop Sound Risk Management Strategies
This week’s webinar notes are from a November 7th event hosted by ISM and presented by IASTA and LexisNexis. The full details of the event can be seen on ISM’s site.
Any company that has implemented a spend analysis solution knows first hand the difference between data and intelligence. IASTA and LexisNexis did an excellent job laying out a framework for bridging that gap in Supply Market Intelligence (SMI). Many SMI programs have grown out of the need to get better risk mitigation from supplier performance management programs already in place. The highest priority risk categories include supply chain continuity, cost, and reputation – the implications of which hit both revenues and stock returns.
As with supplier performance management, supply base segmentation is a key first step. Although a June 2012 Aberdeen Group study found that Best-in-class practice is to cover the ‘majority’ (56%) of suppliers, staffing and budgetary constraints are very real. If resources are to be committed to SMI, the results need to be actionable and predictive, accommodating what can easily seem like too many risk types or too many stakeholders.
In order to be able to fully leverage SMI, it is important to understand the audience as well as the intended use for the information and the questions the audience will want to be able to answer with it. That context allows decisions to be made or actions taken by finding previously unrecognized patterns or trends. Varying levels of granularity will dictated by the audience and by relevant regulatory requirements.
The ideal delivery of this intelligence is flexible and accessible through a single point of entry that incorporates both internal and external data. The speakers suggested the idea of a data ‘mashup’: where relevant data is displayed side by side in order to enable contextualized conclusions rather than an exact-match data integration approach.
The challenges in gathering information for supply management range from finding no useful information to collecting so much content that procurement can’t possible sort through it all to find the useful parts in a timely manner. And yet, LexisNexis did an examination of negative news stories (think textile factory disasters in Bangladesh) and found that there were always ‘bad news’ stories that should have served as warning signs to buyers.
Technology is an important component to SMI programs, but so is a data collection model. One example of this is the PESTLE model: Political, Economic, Societal, Technical, Legal, and Environmental. Regardless of the model selected or platform implemented, actively monitoring the results and positioning it for a known audience turn data into intelligence, creating a competitive advantage for the enterprise as a whole.
For more information on the topic, read…
Blog post: ‘Emerging Trends in Supplier Information Management’ on IASTA’s eSourcing Forum
White paper: ‘Leveraging Market Intelligence to Better Manage Supply Chain Risk’ from LexisNexis
Does your organization have a SMI program? How do you manage the staffing and time requirements? Join the conversation be commenting here or on Twitter: @BuyersMeetPoint.