AMR's Mickey North Rizza recently penned what is perhaps the most detailed case study I've ever read about managing supply risk. In looking at how Dresser-Rand is managing supply risk using D&B's DNBi Supply Management (SM) solution, Mickey goes into great detail about what specific types of internal and external information that the company is relying on to manage all of its suppliers "from the most strategic out to the long tail." The result from these efforts is that the tool "has likely thwarted many supplier failures" which, if we take an average cost between $1-$5 million per failure depending on what numbers we use, represents some significant savings. Company-wide approaches to managing supply risk like this don't happen overnight or just because of whiz-bang content and software tools from D&B and others.
Ken Marcia, the VP of Supply Chain and Process Innovation at Dresser Rand is no stranger to innovative approaches to reduce supply risk. While at UTC, he was part of efforts that helped not only to predict and forecast supplier bankruptcies, but to develop at-risk suppliers. These efforts yielded tens of millions of dollars in hard dollar cost avoidance for UTC not to mention better supplier relationships. If you're an AMR client, you can read the entire research brief (registration and research subscription required). As more stories like this get out, I suspect an increasing number of companies will take the plunge, building the case for businesses to invest in supply risk systems and processes. Kudos to Dresser-Rand, Ken Marcia, Mickey North Rizza and D&B for bringing this real-life case example to the fore. It's time to stop talking about solving supply risk in a black box and start bringing it to life with specific examples of actions and investments that get results.
- Jason Busch