Procurement is typically tasked with sourcing, monitoring, and evaluating suppliers - which also means they play a critical role in identifying and mitigating risk throughout a company’s supply chain. But how risk is measured is fundamentally changing, as are the expectations of category managers, procurement leaders and other stakeholders.
“The requirements and the expectations that are placed on procurement have changed drastically in the past few years,” explains Ingmar Mester, procurement leader at Hapag-Lloyd, a global shipping firm and Craft.co customer.
“Today, you need to know what is happening in your supply chain at every moment—you need to know every detail of your supply chain and you have to be able to find that information.”
And while procurement has lagged behind other industries in adopting artificial intelligence, its importance has become virtually unquestioned over the last couple of years as higher demands are placed on leaders to sense and manage risk both upstream and downstream - and in real time.
As procurement managers search for supplier intelligence platforms, they should understand the most critical features that will keep them not only in compliance with legislative trends within Europe and the US, but also ahead of the curve in detecting red and yellow flags within their entire value chain.
Without a sound sourcing tool in place, monitoring and evaluating becomes increasingly difficult. Looking for new suppliers has traditionally meant going through the current ERP or using a simple search-engine database.
But sourcing is much more than a Google-style look-up. And while having intuitive search functionality is important, it also needs to incorporate advanced levels of filters that take into account a variety of factors, such as financial & economic indicators, product codes, sectors, ratings, supplier diversity classifications, and more.
Having the most high-quality data at your fingertips is only useful if it is structured and can drive strategic decision-making. Make sure your supplier intelligence platform can not only aggregate pertinent data, but contextualize it and provide risk levels based on category - i.e., cybersecurity, ESG, financials - and/or based on a select group of suppliers or industry in real time.
Having experts look under the hood is also important, as reliable and innovative machine-learning models extract deeper insights better than, for example, predictive analytics alone. This also allows you to digest a large amount of data from countless sources in a way that is virtually impossible to do manually.
As risk sensing becomes more comprehensive and supply chain legislation increases throughout Europe and the US, understanding your company’s entire value chain has never been more critical. That’s where n-tier mapping comes in. But unfortunately, it is also notoriously difficult to assess accurately and requires a platform that not only has a top-notch data ecosystem, but also robust integration capabilities with your ERP and other applications. And as oversight over Scope 3 emissions heightens, organizations will be left with little to no choice over whether they want to invest resources into n-tier mapping.
The natural next step would be to inform stakeholders of these insights gleaned from a risk dashboard. A supplier intelligence suite that offers customized alerts based on factors that are important to your team and organization allows procurement to take swift action when necessary.. But highly targeted alerts are the key, as notifications that are irrelevant or insufficient will only obscure access to the most critical news and information.
At minimum, alerts should cover news events and risk domains such as financial changes, cybersecurity scores, operational fluctuations (i.e, a large drop in headcount), ESG and sustainability measures.
Supply chain disasters can stem from a multitude of issues, but a recurring undercurrent is a lack of coordination and collaboration. Take the infamous case of Nokia and Ericsson. When a fire broke out at the microchip plant where both companies received their supply, Nokia’s team moved quickly to communicate urgency with stakeholders and devise a plan. They secured the remaining supply at the plant and also collaborated with their team to re-engineer their phones so that chips from other companies would be compatible. Ericsson’s leadership, on the other hand, wasn’t even aware of the fire until it was too late and any remaining supply was gone.
There are many supply chain lessons to be learned from the story, but one that is hard to ignore is that there is a steep price to pay for a lack of cross-functional communication and collaboration. With at least some case management tools, you’ll be able to tag anyone in your company with important messages, share reports and upload relevant documents.
Supplier intelligence platforms should include even more features, but at minimum, these tools will allow procurement professionals to stay on top of the ever-changing ways that supply chain risk is being measured.