Supply Chain and Risk Management: Understanding the Latest in Systems and Technology
Categories: Risk Performance and Compliance, Supply Risk Management | Tags: L2, Process and Best Practice
The sixth concept that I introduced in my “what’s next” presentation at ISM’s Risk Conference in Chicago this summer was the importance of “understanding the latest in technology and how to take advantage of systems that sit within the network.” I suggested that internal systems will not go away to help manage risk (e.g., spend analysis with credit-derived vendor risk information), but rather they will become of secondary importance compared with the systems that sit between companies – which will truly offer a transformative experience for procurement and risk management teams.
I highlighted here the “platform” concept that Tradeshift pioneered and now Nipendo, SAP/Ariba, and others are also embracing. The concept of a platform is not only to serve as a central hub for transactions and for suppliers to maintain their profile information and access invoice and payment status (on the most basic level), but also to enable others to build capability out of the network ecosystem. The simplest analogy is the Apple App Store, which is valuable not because of Apple’s own applications that one can purchase within it, but the third-party tools that not only are available within it but also leverage the infrastructure of the platforms themselves (e.g., utilizing the camera in the iPhone to accurately measure one’s heart rate).
In short, it’s only a matter of time until networks begin to combine transactional connectivity, supplier management, risk management, and other capabilities in a many-to-many fashion (e.g., SAP/Ariba) while also layering in this platform notion, enabling others to capitalize on – and create greater value for – all other ecosystem participants. These approaches will unite a number of capabilities to create new value propositions for buying organizations, from integrated supplier management and search to global transactional connectivity/standards for transactions and information exchange to predictive multi-tier insights around different types of vendor risk.
Looking ahead, such tools will also help to eliminate duplication of effort, as some will provide a single location for non-stakeholders to manage up-to-date supplier information for compliance and risk management initiatives like CSR, vendor viability, etc. And ultimately, this transformation will bring new Amazon-like merchant services business models and new information clearinghouses for managing SMB risk (e.g., by 2020 Intuit becoming both a bank and “new” D&B for small business risk monitoring based on the opt-in information sharing of its QuickBooks customers).
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