Aravo's $50K Supply Risk QuickStart (Part 1)

Last week Aravo announced a new $50K Supplier Risk QuickStart program that offers one of the first affordable and integrated software/services programs to tackle multiple areas of supply risk. Having been briefed on it, and knowing Aravo's overall approach to supply risk beyond this targeted offering, I'm excited about the solution, even if it is, by design, limited in its scope and capabilities. Still, Aravo's Supplier Risk QuickStart program offers companies a lot of bang for their buck, profiling and managing risk data on up to 1,000 supplier profiles, delivering a combination of services and software to roll out a deployment in 60 days or less for an annual cost of $50K. This price tag includes all software (in a SaaS model), services, implementation, and training. In other words, for the cost of a BCG or McKinsey strategy team onsite for a day or two advising on "risk factors in the supply chain," you can implement a limited solution for a one year period. Not bad (especially considering a full risk engagement from a strategy consulting firm is likely to cost more than a bankruptcy in your supply chain).

As a foundation to jump-starting the data-driven components of a risk analysis, Aravo's offering leverages data that an organization might already possess. This might include demographic data on suppliers (including locations, divisions, revenue, etc.), quality/on-time performance data, financial/credit ratings, overall strategic importance to the business (e.g., single source vs. multi-source for a given item, component or service), quality/risk certifications, and overall spend concentration (i.e., percentage of business with the supplier, or the supplier's percentage of business with the buying organization).

Given the many options for prioritizing data fields in an initial risk dashboard, management, and monitoring toolset, it's a good thing Aravo provides a member of its services team to help each organization decide which fields matter most (this consulting resource is included in the $50K cost, though I would assume, given the solution's low price, it is a shared resource). Aravo assures its clients that its consultants are trained to help assess the risk factors needed to monitor across a range of areas including financial, regulatory, compliance, geographic, industry, and quality. (Under the QuickStart program, companies may chose five areas along with their "corresponding attributes," as Aravo and the organization define them.)

With a strategy in place, Aravo and its client then begin to collect and aggregate information from different departments inside the company, identifying the specific sources of data that are critical to supporting the risk areas that concern them. This includes creating weighting surveys and rankings that assign specific weights and values to attributes within each risk category. For example, within financial risk, a company may decide that 50% of the risk factor should be placed on one or more credit or third-party risk ratings (e.g., D&B SER) with the remaining points split among other factors such as spend concentration, ease of switching suppliers, etc. It is important to note, however, that Aravo does not provide third-party content to companies under the QuickStart program; each organization is primarily responsible for leveraging information already available from internal sources.

One thing that is relatively differentiated about Aravo's $50K off-the-shelf package is the degree to which Aravo is willing to go to customize and validate the data (and sources) as well as update integration approaches and frequencies during a deployment. When I contacted Aravo about this, the response was, "Our approach differs depending on the data type, and on the customer needs. We are pretty flexible and our services team often recommends the most frequent update that is feasible. For example, for tax ID validation, we're going out real-time to the IRS whenever called for in the workflow ... Same applies to the OFAC watch-list checking via ChoicePoint. For bank ID validation, we are actually storing that data within Aravo and receiving periodic updates from Accuity. And then, as with the others, we can validate against that data as Aravo and the customer choose based upon the workflow …"

Stay tuned for more information on how the Aravo QuickStart risk approach works in practice and what customers can expect towards the end of this week. And later this month, I'll also compare it with what D&B has to offer along with a new, more comprehensive supply risk offering from SAP (not to mention Aravo's more robust Risk solution).

Jason Busch

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