SRM and Global Services/BPO – New Offering/Approach Emerges to Predict Risk (Part 1)

Even though I've not had the chance to do the standard homework we usually do at Spend Matters before writing about vendors and solution providers (e.g., briefings, demonstrations, reference checks, etc.), I thought I would share the news of one new product launch in the area of monitoring offshore services firms from a supply risk perspective (because of its timeliness and approach to the issue, which I think can educate us all). The solution Global Supply Risk Monitor comes courtesy of Neo IT and purports to be the "Global services industry's first ever comprehensive Risk Monitoring monitor, predict and manage the various risks in their services supply chain (captive centers and outsourced services such as ITO, BPO, KPO etc) across countries, cities and suppliers."

While we hope to dig into the solution in detail in the coming months ourselves -- and we'll reserve passing judgment on it until then -- the approach Supply Risk Monitor takes is quite insightful as we think about developing our own programs designed to monitor global supply risk outside of direct materials. For example, consider how Global Supply Risk Monitor considers three different factors in its core risk model: supplier risk, city risk and country risk. Elements influencing supplier risk include the usual suspects (e.g., financial) we'd see in more traditional supply risk solutions designed for manufacturing supply chains. Yet this approach also encompasses such areas as "governance, infrastructure, alliances, clients and people."

City risk also presents a fascinating look at risk factors in the services supply chain, taking full consideration of a variety of areas including local political risk (important in India and China, among other countries). And country risk includes a variety of factors we should be considering on both a macro (and micro) level when it comes to where we do business. Here at Spend Matters, we're observing an increasing trend of monitoring a range of non-financial factors when it comes to forecasting and mitigating supply risk. From SAP's Supplier InfoNet solution to some additional products we've seen (and heard about) under NDA recently, it's clear the next level global supply risk management solution will no doubt far transcend basic financial modeling to predict risk. Indeed, perhaps the old Altman-Z score will go the way of the dinosaurs.

Stay tuned as we probe on some of the specific risk elements Global Supply Risk Monitor considers in more detail.

Jason Busch

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