Catching up With Panjiva: Supply-Risk Content Goes Global

Last week, while on a whirlwind tour of the East Coast, I had the chance to catch up in person with Panjiva's Josh Green. For additional background on Panjiva, you can read my initial commentary on the company here, here, and here (and more recent analysis here, here, and here). Josh started Panjiva with a colleague only a handful of years ago yet already has been able to garner some impressive headlines in top media publications, owing to their ability to mine large amounts of global trade information, spotting trends in commodity as well as supplier and regional trends month over month. But despite this headline-grabbing attention, there's not exactly been a rush for companies demanding global supply-risk data (such as regional risk information) in many of the supply-risk, supplier-information management, and spend-analysis engagements I’ve been privy to. In fact, few folks in procurement seem to know about the power that information sources like Panjiva can have when it comes to monitoring risk in their global supply chain.

I suspect this will change in the future, and if recent traction is any indication, Panjiva appears to be making inroads in educating a limited procurement audience about the benefits of examining global trade information to drive better supply-risk and sourcing decisions. Josh shared with me that "Since September, when we introduced a new pricing structure -- $4,800 for a single user and $12,000 for a team of users -- we have tripled our subscriber base." Josh also shared with me that companies are using Panjiva information not only to monitor the risk of existing global suppliers (e.g., the relative volume and volume trends of a Chinese supplier exporting to the US) but also in the initial sourcing process to vet suppliers and create short lists. Specifically, in many cases, companies are using Panjiva’s data to conduct quick "background checks" on potential suppliers early in the sourcing process.

In these queries, companies are typically searching for specific information on potential suppliers. This might include profile information (e.g., basic contact details, offices, etc.) as well as Panjiva's rating, shipment trends, and domestic customers. In other words, Panjiva data can provide a quick snapshot of a potential supplier to either confirm what it's already talking about in a sales process that's already started, or for a global sourcing organization to research potential new suppliers to include in an RFI or RFP based on specific search criteria (e.g., commodities, locations, volume, customers, etc.) As you might imagine, this type of information can prove quite useful for monitoring the global sourcing activities of your competitors as well. Now granted, this intelligence is most certainly not 100% accurate -- there are in fact many ways suppliers and buyers can distort trade data, such as transshipping, using a different trading or import company, etc. -- but it's surprisingly good for basic competitive queries.

This type of insight is also useful for understanding the broader economic picture of given suppliers, market segments, regions, countries, and industries. Because Panjiva also has import data on Chinese companies, for example, it's possible to discern a longer-term view on risk versus just looking at exports as a gauge. Consider: if a company ramps down import volume for raw materials, it's likely that it's either facing reduced demand or it's found an alternative domestic source of material. This type of intelligence can also be useful for keeping tabs and ensuring that suppliers are working with specified lower-tier raw-material suppliers, and that contracts with escalator/de-escalator clauses are tied to the right indices.

In terms of starting conversations with companies in this and related areas, Josh told me that Panjiva has found that global supply risk can provide a good entree to kick-start discussions with procurement executives that have expressed interest in the area. What's interesting here is that most users of the type of information that Panjiva is providing have historically not come out of procurement. Rather, they’ve been part of trade, customs, and compliance groups in companies. But the genius of what Josh and his team are up to is taking a new angle on trade data by analyzing it in a global sourcing (and competitive global sourcing) context. When Panjiva talks to prospects about how they might use this information, general supplier search and market intelligence is what typically comes up first. The good news here is that Panjiva is beginning to see budgets open for companies to buy content of this nature. Whereas budgets did not exist for global sourcing and supply risk intelligence in the past, they are starting to now. Moreover, this type of content is relatively cheap. Companies can get started with Panjiva for as little as $399 per month on an all-you-can-eat basis for a single seat.

Stay tuned for continued analysis of Panjiva and other sources of global supply-risk content in the New Year.

Jason Busch

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