Earlier this week, I had a good chat with Rick Teague, D&B's Global Supply Management Solutions' Leader. Our conversation focused almost entirely on D&B's recent acquisition of Open Ratings, and what it means for D&B and the market overall. Rick clearly has a strong passion for the sector, and is fired up based on D&B's current lead in the supply risk management arena, and the opportunity to drive the growth of a market which is just beginning to get off of the ground. While Rick noted that he "fully expects people will come out and compete against us," he is confident that D&B has a great lead and strong resources, as well as focus behind their efforts. Rick also emphasized about how "deliberate D&B" is when they make acquisitions. I agree with Rick that with Open Ratings, D&B has built a substantial lead in the supply risk management arena. I also agree that the Open Ratings acquisition was a smart, deliberate move. But perhaps D&B's greatest risk will not be emerging or future competitors, but the failure to fully take advantage of the opportunity in front of them. Let's hope they overcome it!
A number of my points during our conversation centered on the need for D&B to continue to build on Open Rating's evangelism of the supply risk management market. The reason for this is that overall investment in supply risk management has largely been confined to discrete manufacturing and A&D so far. Yet it is obvious that companies across sectors (from retail to pharma to government) could benefit significantly from more closely monitoring supply risk and supply performance. On our call, Rick stated that he "can't think of an organization that does not need to manage risk in its supply base. But the question is how much of its supply chain represents a significant risk to them. It will be essential to package approaches to supply risk management in different ways."
I believe Rick is spot on here, and it will take this level of slicing to sell supply risk solutions to industries which have not yet prioritized -- or even thought about -- their vendor exposure. But if D&B gets the marketing right, the revenue opportunity is huge. Take for example, a hypothetical example in financial services sector. Even a typical regional bank, which one would not think would have significant supply risk, would be a strong prospect as a customer for supply risk management solutions to in the future. That's because there's a strong chance that the bank has -- or will -- outsource computer or help desk operations which creates operational, delivery and customer risk should service levels decline (which almost always occur when a supplier is going through financial hardships). There's no reason that a regional bank should not monitor its outsourcing providers just as a Raytheon or UTC monitors its direct materials suppliers. For D&B, the key will be packaging supply risk management solutions to reach new segments of the market like the bank in question. But based on our discussion, it seems that Rick and his team are more than up for the challenge.