Scanmarket CEO: Coronavirus crisis is forcing companies to identify an array of business risks

Scanmarket CEO Betina Nygaard

The coronavirus outbreak has made online work more vital than ever, and with all of the digital transformation and increased use of procurement technology, vendors have more visibility into  what’s actually going on with businesses, which even during this crisis must remain focused on serving clients while their own personnel work from home — sometimes in cities and countries under lockdowns.

To get the pulse of what’s happening, we got in touch with e-sourcing specialists Scanmarket, a company that’s facing both of those pressures. The cloud-based provider operates globally but has its core group in Denmark, one of the first countries to institute a nationwide lockdown.

In any crisis, businesses’ timelines for answers speed up and priorities change. So we talked with Scanmarket CEO Betina Nygaard to get some insight on how the crisis is unfolding and how businesses are addressing all of the risk they’re facing.

Q&A

Scanmarket has offices in the United States and across Europe, so you clearly work online, but on a personal level, how is your team handling the new reality of working remotely from home for the first weeks of the lockdown?

Betina Nygaard: Apart from not being able to see each other every day, it is pretty much business as usual. We are lucky to have a business that enables us to continue our work and uphold our day-to-day engagements with our customers, regardless of where we are physically situated. In fact, this experience has brought us closer in many ways. Everyone has shown a great understanding of each other’s different challenges, and there has been a huge willingness to help each other across the departments. We’ve been forced to become more transparent in what we do and utilize all the online tools available, including our own Project Management tool, to optimize visibility into our own organization. A very healthy exercise!

On the customer side, are you seeing a slowdown of activity with the use of your system as companies and people are affected by lockdowns and working from home?

No, so far not at all. The beauty of strategic sourcing is that you can carry out your business online, so we haven’t experienced a big slowdown of activity at all. Instead, the numbers indicate that our clients are taking their upstream procurement online, so for us it is business as usual but with an upward trend.

What e-sourcing tips do you have for addressing risk mitigation?

In order to identify and understand where your risks lie, you must define what kind of risk you are dealing with and then see how this will impact your supply chain.

Step No. 1 is awareness and overview of the risk factors:

  • Disruption Risk:
    • Weather (storms, flooding, drought)
    • Diseases (COVID-19)
    • Political (war, regulations, government interventions)
  • Brand Risk
    • Reputational risk (e.g., child labor deep in your supply chain)
    • Fraud or similar (carbon emissions, waste)
  • Price Risk
    • Increase in raw material prices
  • Financial Risk
    • Suppliers might have a fragile economy and may not have financial strength to stand through tough times

Step No. 2 is to find out how vulnerable you are toward the identified risk factors:

  • Which of my suppliers could potentially present a risk to my business if they were gone tomorrow?
  • What can I do about it?
  • What impact would that have on my business?

Define your supply risk management program.

Know what risk factors could potentially hurt your business the most. For once a positive mindset is not useful.

Use a scorecard to get a full overview of each suppliers’ risk profile. Here, an RFI system and tools for Supply Base Management (SBM) are extremely powerful to get a quick overview of each supplier, and thereafter know what action to take in order to mitigate risk.

You have a specific, best-of-breed solution. What can new clients expect if they want to adopt technology now that can help in a crisis?

Most importantly, they can expect visibility. Given the current situation, what everyone needs is to quickly assess the risk in their supply chain, and this is done extremely efficiently by using our eRFx and Supply Base Management system.

Some need to quickly deal with a supply gap, because they haven’t been able to get their raw materials for their production. They can do this by utilizing our eRFx and eAuction tool.

Since everybody is working from home, there is a need for an overview of what team members are doing and the status of their different projects. Our Project Management system can help them do that.

They need to quickly create, approve, sign and track multiple new contracts with new suppliers. Our Contract Management module can help them do that.

After visibility, time is of the essence. Businesses need to react and adapt quickly. This means that they need to have a system up and running quickly. We see a huge demand for this speed right now, and we are working 24/7 to get new customers up and running within 48 hours.

Companies cannot wait four to six months for a full implementation of a system, they need it now. Our system has been built in a way so we are able to set up clients fast, and we are running daily webinars to help train customers’ staff, since we are not able to train them on-premise right now.

We are also seeing a focus on costs. Everyone needs to keep their costs down, investments are being frozen, so the investments in the full end-to-end solutions might suffer. The customers need a system that can do the job here and now, so focusing on a best-of-breed is a trend that keeps us very busy. Our customers want a quick and easy solution, that is easy to implement, easy to use, ensures efficient throughput and they only pay for what they need. This is how our customers achieve value for their money and how they achieve the results they so desperately need fast.

One of our customers — a large British entertainment company — told us that our speedy implementation was critical to them. Their group procurement director said:

“We wanted to ensure that we had the best e-sourcing tool for our business. Ease of use, efficiency, speed of implementation, depth of functionality, support — these elements were absolutely crucial; the benefits of having a one-stop solution were a distant second. The implementation process was surprisingly easy. We were up and running our first events in a matter of weeks. As a result, we were able to deliver the 24-month Business Case benefits target within six months.”

What advice do you have for businesses that mainly use their procurement technology for cost-savings but now need more tools and insight to manage a crisis?

Our advice is to use your procurement technology to create visibility. This visibility should enable you to identify the risk to your own business and enable you to mitigate and adapt where necessary.

What can businesses do to plan for the crisis and the recovery over the next few weeks, then six months from now and a year on?

This situation has made it very clear that a supply chain risk management program is vital.

Being forced to take your procurement online is not a bad thing, rather it is a very efficient way of conducting business. The change management aspect is often what we have seen holding companies back from investing in online tools. Change management and costs. They have looked at the upfront investment in an e-sourcing system and not the benefits they would gain from higher visibility and higher throughput. This crisis will most likely change that, one could argue that it forces you to — otherwise competitors will achieve efficiency and avoid risks while you are left in the dark.

Make the best of this situation. Right now, no one will challenge the need for change. Most employees can see the benefits and are willing and positive to change. The same goes for the costs. The costs of not doing anything are higher than the costs of taking procurement online and implementing change.

For the companies who have invested in procurement tools already, my advice is, make sure you utilize it to the fullest extent. Now is the time to demand usage. You have already made the investment, make sure you get value for your money, it is needed. Take this opportunity to show your employees that this is actually a benefit to both them and to your business. Show them, how utilizing the tools to the full extent can contribute to the health of your company and to maintain jobs. Let them know the importance of adapting and improving.

This Brand Studio post was written with Scanmarket.

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