D&B Morphs and Grows Its Overall Supply Management and Risk Strategy (Part 2)

- April 14, 2010 12:04 PM
Categories: Spend Management |

In the first post in this series covering the latest on D&B’s product evolution in the supply risk and supplier management arena, I provided background and context about the growth of their Supplier Risk Manager solution, going back to D&B’s acquisition of Open Ratings nearly five years ago. In today’s installment, I will provide more details about specific product investments and enhancements D&B has made. D&B has focused quite a bit on adding international suppliers in recent years, both through organic investments in different markets as well as partnerships and acquisitions — these moves are perhaps the most important for companies focused on global sourcing and global risk management efforts. Today, D&B’s supplier database now stands at 160,000,000 suppliers (obviously with different and varying levels of detail and information based on size, geography, record longevity, etc.).

What’s interesting to note about the growth of D&B’s supplier database is that, in their words, the “vast majority” of recent additions represent suppliers from low cost countries. Specifically, they’ve added “10 million additional records primarily in the Far East and South East Asia.” As part of an effort to improve the quality of information, D&B converted a joint venture in India to a fully owned entity. My own analysis of D&B and competitive data suggests that the quality of low cost country information on suppliers is still not often on par with data available on Western suppliers in terms of forecast accuracy, completeness, etc., but certainly this type of information is better than nothing, especially when combined with sources like Panjiva that track customs and related export information from global markets.

In my latest update with D&B in March, I inquired about their shift in strategy to sell both through channels and directly. Jim Lawton, who runs the SMS group, responded that, “At the end of the day, my philosophy is that it’s critical to build solutions that customers want to buy. They will want to invest in applications the way they want to. There are fundamental categories of ways to do this. In certain cases, they will want solutions from a single provider, optimized for specific needs. Given this, it is important to have the best capabilities in certain categories. In other cases, they will want to get software from other companies and leverage D&B content and insight. In either case, it is essential to make sure the customer is getting their specific needs solved. In some cases, it may be working directly with them; in some cases, it may be working with and through other applications and partners in the market. I do not see these being in conflict with one and other. There are parts of the market that want to operate in the market in certain ways, and I believe it is important to serve the customer in the ways that make the most sense for them.”

For customers who want to go direct to D&B versus buying content through a channel partner, D&B has integrated what I consider to be the best elements of the old Open Ratings solution — the combination of analysis that considers both supplier operational and financial data — into their re-architected platform. By looking at supplier operational and financial data together, it becomes possible to obtain a higher level of accuracy and lead-time in forecasting supplier insolvencies or related disruptions / quality degradations. Moreover, operational data (e.g., PPM, escapes, on-time performance, etc.) is often the best data available for predicting supply risk for smaller and middle size suppliers, who typically don’t have the same type of credit and financial records on file as larger vendors with D&B and other credit rating agencies.

One area where D&B has enhanced its supply risk platform significantly is in allowing companies to identify specific elements they might consider over others. For example, depending on the risks they’re concerned with, a company may wish to consider financial, compliance, regulatory, special event or other specific supplier profile elements to monitor in a real-time basis. By blending these different sources and feeds together, it becomes possible to gain a more accurate view into the overall risk a particular type of supplier may present to the business. Even though they’re known most for credit reporting, D&B claims to track over 4,000 data elements of companies today (obviously with varying levels of depth and accuracy based on supplier size, geography, etc.). Supply chain disruption is increasingly caused by non-tier one suppliers. D&B also monitors supply risk on a multi-tier (i.e., tier two, tier three) basis for its customers.

- Jason Busch

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