Procurement
Don’t just measure risk - mitigate it

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Don’t just measure risk - mitigate it
Enno Lückel

Enno Lückel

VP Sales

The years 2020 and 2021 are likely to be the perfect textbook representation of risk for the supply chain. Events like COVID, Brexit, trade disputes, natural disasters etc. have in turn imposed massive effects on global supply networks. Besides these obvious risks, which can easily be identified, a more complex range of risks derive from these events and can hinder an organization by causing an inability to produce goods. 

Having access to technology for data mining, dashboards or even special risk management tools for the supply chain is valuable, since these systems can provide an early warning system indicating when elements are not performing as they should be. However, when it is known that for example, factories are unable to produce pre-products, that a border is closed due to a pandemic, a ship has sunk or an earthquake has happened, what can be changed then? In most of these cases, an early-enough warning is often not possible and a purchaser is confronted with the facts – period. 

In a perfect world a second source exists, but can it deliver on time, to your quality and at an adequate price? Obviously, there is an aim to have a second or third source, but even as obvious as this may sound, such sources may not be available due to prior efforts to reduce cost or simply due to the fact that many large impacts do not only strike a single company, but many across a region. 

With the example of die casting, this can clearly be seen. When large car manufacturers no longer request the planned production, OEMs have to scale down their production due to their high dependence on a single customer, and may go out of business quicker than one would imagine. Now all demand would be shifted to remaining ones, who most often have their own customers they first need to satisfy and so on. 

This is an example of how a supply chain can be impacted and the reporting engine will indicate a problem, but not the solution for it. It’s also an example of how the use of scoutbee’s Streamline and DeepSee could really help.

Both products focus on supplier management, but before the classic process. While Streamline is an AI based platform to search for the best new suppliers globally, DeepSee focuses on identifying optimal sources within the existing ecosystem of suppliers for a company. 

How is it done? Using Streamline it is possible to name a commodity being needed in detail (die casting for aluminium, 1000 units, … company needs to be certified by … , needs to be in Asia etc.) and based upon this and other criterias, a global search of millions of supply chain data points is performed. Through a qualification process involving over 1000 potential suppliers, the list is reduced via qualifications (such as certifications, credit worthiness, industry awards, etc.) and collaboration in an RFI process to an ideal list of 3 to 5. These 3 to 5 new suppliers are then onboarded to a supplier management system or ERP as it normally would.

Why is the scoutbee process better for most organizations? First of all, a manual search would maybe involve a long list of 10 suppliers which would have taken a purchaser hours to build via manually searching sources like the internet. Then the process would continue with qualifying the potential suppliers for their ability to produce that specific product and ship it to the country needed. 

This sequence can easily take many weeks to complete, since often enough suppliers need time to reply or the sourcer does not speak their local language etc. The result is a long and tedious process, which is prone to errors and human bias. Poor supplier discovery performance will impact production and shipment of products, since most often disruptive events happen without a long warning cycle and new sources are required immediately. 

scoutbee offers organizations tremendous strategic value – not only for supplier discovery, but also to qualify data in existing ERP systems, to identify alternative vendors for existing setup suppliers, provide additional data points for negotiations or maintain lists of potential future suppliers.

scoutbee’s Streamline can help every procurement team to be faster and more accurate. Our solution unlocks max value of in-house sourcing experts to be able to more quickly qualify potential sources for quality and optimal fit. This is the difference between passive risk management and active risk mitigation. 

What can scoutbee scout for you? To find out how our team can help you transform your sourcing success, why not book a chat with us today at sales@scoutbee.com.