An Alternative to Open Ratings for Supply Risk Management

In the past few months, I've had a couple of insightful conversations with Ryder Daniels of JV Kelly Group, a boutique Spend Management consultancy. In addition to strategic sourcing work, JV Kelly has also built a number of new risk management and dashboard custom hosted applications for procurement executives. While I would still very much describe JV Kelly as a services firm with enabling software (like FreeMarkets circa 1999), they're clearly creating innovative, custom Spend Management applications which are gaining traction in the market. Consider their supply risk management solution which is perhaps the only true alternative that I have seen to D&B / Open Ratings in the market today (though JV Kelly is a D&B partner and relies on D&B data for their solution). Currently half a dozen of the Fortune 100 have deployed custom developed JV Kelly supply risk management solutions.

Pulling a combination of D&B data and internal information -- if desired -- such as spend, utilization, and satisfaction, each custom deployment provides visibility into supply risk. What's also intriguing is that JV Kelly's customers have often deployed these applications using a supplier pays model. Essentially, from what I can tell, the model is to have procurement organizations force their suppliers on the tier one and tier two levels to cover the cost of the D&B data pulls, as well as to offset JV Kelly's development fees. It's a smart model to market, and one that is surprisingly inexpensive (even for suppliers). Moreover, it's also proof that buying organizations can force their suppliers to cover the cost of "insurance" that provides early warning before disruptions occur.

One of the other innovative custom Spend Management applications that JV Kelly has developed and deployed are outsourcing management dashboards which focus on monitoring two key areas, KPIs (key performance indicators) and SLAs (service level agreements), for outsourced services agreements. These custom dashboards usually focus on 3-4 top roll-up metrics to help procurement and IT organizations quickly gauge supplier performance (and financial health, if the risk element is included), with the ability to also drill down on additional metrics and information if desired. Typically, the lowest level contains dozens of individual metrics, cycle times, etc. These dashboards can either work off a real-time interface with a source system or on a batch model.

According to Ryder, procurement organizations are looking more to dashboards from a performance and risk perspective because of data overload. In his words, "clients suffer from report overload -– we've gone from data-starved to data-drowned". Supplier dashboards, in many cases, can be a short- or long-term panacea to the drowning-in-data challenge, helping organizations to analyze and summarize huge data elements and sets while providing a simple user interface that enables rapid discovery, drill-down, and further mining. And most important, performance and risk management dashboards can turn data into knowledge that is actionable before it's too late.

The case of JV Kelly and their supply risk / performance management solutions presents two interesting points. First, it shows that D&B can make money in the supply risk management arena regardless of whether they are selling their own solution (Open Ratings) or not. This balance of being both an arms dealer as well as providing a private army is unique in the market. Second, it also shows that companies can leverage firms like JV Kelly to build custom applications that are inexpensive and as -- or nearly as -- effective relative to traditional enterprise solutions. Who says custom is dead? But this time, it's about tricking out a Fiat, not a Bimmer.

Jason Busch

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