Spend Matters, Live From ISM on Wednesday: Supply Risk Management Solution Analysis Session (Part 1)

This Wednesday at 9:00 AM PDT at ISM, I'll be co-presenting with Sherry Gordon, a Spend Matters contributor and president of the Value Chain Group. Our session is titled "Understanding and Choosing Supply Risk Solutions: Software, Content and Analytics." The two of us spent quite a bit of time analyzing the supply risk solution landscape and building a presentation that we believe captures the different categories of solutions as well as the leading vendors and providers within each one. To the best of our knowledge, it's the first time any independent analysts with a background in supply risk and performance management set out to objectively segment and analyze the provider landscape. Regardless of whether your company is looking to extend current implementations (e.g., spend analysis) to support various risk elements in as economical a manner as possible or has the budget to support a broader supply risk monitoring and mitigation approach, we think the session will provide useful context, vendor intelligence and different solution approaches. Also, if you're curious to read Spend Matters' latest published research on the subject, you can download a recent whitepaper on supply risk and analytics here.

In our research, we concluded that solution providers generally approach the supply risk market in one of four ways. The first category of risk solution extends the spend visibility paradigm and augments existing spend data cleansing, classification, enrichment, analytics and visualization technologies with supply risk elements. Some of these approaches are more developed than others, but in our opinion, we think this category of approach will appeal most to companies that want to check the box around having done something to proactively monitor supply risk. One of the major challenges of the spend visibility landscape, especially as it applies to supply risk, is that there are dozens of providers claiming to deliver a differentiated approach and model (not to mention services and solution-driven approaches, which can act as a substitute). The landscape can get confusing, quickly, as can the quality of data enrichment provided (e.g., how often is the data –- not just your spend data, but the risk enrichment data -- refreshed?).

The second categorization that we use in explaining the supply risk solutions landscape is supplier information management -- or supplier management for short. This category of solutions usually focuses less on providing line-item visibility into spending data, but rather macro-information on suppliers rolled up into a single view. I've heard descriptions of better implementations of supplier information management described as a virtual vendor master with new levels of monitoring, tracking, compliance and related details. This description is fairly accurate, though it does not encompass the depth and flexibility of the process automation, workflows, compliance tracking (e.g., insurance/quality certifications), enrichment and overall systems integration hooks that advanced SIM deployments cover. Still, companies that track supplier financial risk in supplier management tend to do it in a very similar way to the enrichment methods in the spend visibility category. Supplier management solutions, however, let companies get an even broader view into other forms of supply risk.

Stay tuned for Part 2 of this post, where I'll cover the other supply risk solution categories that we'll present.

Jason Busch

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