SAS: Quietly Making Inroads in Supply Risk Management

When you're one of only a handful of providers preaching the supply risk management message -- and selling missionary solutions to boot -- there are often more ups than downs, as you try to get companies to listen and to get innovators and early adopters to take the plunge. But SAS, despite the challenges of pioneering a space that extends beyond black-box Open Ratings style monitoring, is pushing hard on the supply risk front and generating the right type of customer attention. I had the chance to catch up with the supply risk team at SAS earlier this summer and they shared with me the progress they're making as they take some really innovative approaches to market.

Among other things, SAS has signed a supply risk deal to do a proof of concept with an automotive company. Here, the interest seems to focus on the predictive modeling front around supplier financial stability (automotive companies for good reason are more concerned with this basic issue than such things as environmental, transportation, weather and other risk elements). But I'm guessing that with the current concerns over quality and safety with a number of manufactured goods coming from China and other low-cost locales, that SAS will begin to see interest in broader, more holistic supply risk management needs as well.

In my view, it's the intersection of supplier quality, performance, and financial viability combined with logistics and delivery risk that provides the most thorough picture of supply risk that an organization faces. And modeling this type of risk through scenario analysis to come up with an optimal supply chain design in the first place is, after all, the Holy Grail of supply risk management to begin with.

Without question, the search for the Grail -- and the customer(s) willing to invest in the quest -- will continue. But today, the SAS team is finding that what is getting companies most interested in their approach is targeted survey-based model based around financial indicators -- as well as looking at data on quality and delivery -- using large data volumes and sets. The key for this approach to successful predictive forecasting around supply risk is examining "large volumes of data and picking signals out of the noise," as they put it.

And in doing this, it's helpful to be working with partners as well regarded and respected as Kevin McCormack at DRK Research and Rob Handfield at Supply Chain Redesign. I heard from at least one source that Dr. Handfield gave an outstanding presentation on supply risk back at the ISM executive conference within a conference. But it's too bad only the muckety-mucks got to hear it. After all, supply risk management is a topic that should concern everyone involved in procurement and supply chain work. And even though SAS' missionary-opportunities will certainly come from executives willing to take the plunge, long-term, I'd be willing to bet that companies will have specific manager and director roles whose only function will be to monitor supply risk -- and buy and deploy SAS-like solutions.

Jason Busch

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