Here’s How You’re Going to Get Supplier Risk Ratings in Less Than 10 Years

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Imagine you're strolling along — or perhaps your self-driving vehicle is spiriting you around the new megacity in which you live — in the year 2025, while doodling around on your iPhone 15 (still unsafe while driving? or would that be cool by then since you're not actually driving?)

At any rate, while you're checking a push notification on LinkedIn telling you to congratulate your college roommate who just got a new job at The New Facebook, the supply risk technology that your procurement organization uses is also using LinkedIn; only behind the scenes.

For example, as you tap out a "Congrats on the gig, bro," an AI bot lets you know that LinkedIn has been sensing defections at a strategic supplier you have a relationship with. On its own, perhaps no big deal — but synthesized with other data, the picture being painted is the new normal for supply risk management.

That's one radical future SRM scenario — in which democratized, aggregated, social and personalized supplier risk ratings are the norm.

Consider this: a world where credit bureaus and Dun & Bradstreet-type ratings models have been disrupted by a new approach to risk scores and predictive analysis built on a foundation of democratized, aggregated and social inputs — with a push-driven AI framework doing the heavy lifting on top of all the combined data sets.

Think about how this can happen in practice. A buyer gets a notification from the supply risk “AI bot” about a small but strategic lower-tier supplier. It lets the procurement user know that:

  • LinkedIn has been noticing that supplier employees are starting to defect
  • Social chatter has indicated increasing negative sentiment — albeit only slightly
  • Glassdoor.com reviews have also been trending down
  • Some insider trading volumes are also up
  • Community rankings of the supplier from the Ariba network have surfaced some rumors

After clicking into her risk dashboard, our category manager learns that what’s odd about this particular situation is that on-time delivery has actually improved. Other AP dashboard information incorporated into the risk framework suggests that finance is still paying on good terms.

But strangely enough, the dynamic discounting offer for 3% discount net 0 has suddenly been accepted. And most curiously, Rapid Ratings has reported that the supplier has declined participating in its FHR scoring for the last two periods.

Something to look into? You bet. Especially because the personalized risk score for the supplier — after considering these factors together — suggests a high incident (insolvency, disruption, quality issue, etc.) potential.

But it’s just another day at the supply risk management virtual workbench in 2025.

Enabling technologies include: AI, Social, Big Data, Analytics/Algorithmic, Cloud, Data and Mobile.

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The above scenario is one of three explored the latest Spend Matters research report by Jason Busch and Pierre Mitchell, titled Digital Supply Risk Management in 2025: Three Radical Scenarios Built on Today’s Disruptive Technology Models. 

Download it free today.

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