Ensuring Supplier Transparency in Uncertain Times – D&B Supply Chain Risk Report

We are pleased to feature this guest post from Chris Laws, Head of Product Development - Supply & Compliance at Dun & Bradstreet.

Supply chain issues, from KFC’s chicken shortage to Carillion’s supplier contract debacle, made the headlines in 2018. Both stories served as a reminder to businesses that – no matter what industry you are in – a risky supply chain could, and most likely will, lead to reputational and financial damage. This is all within a business environment that is dealing with the UK’s exit from the EU.

Brexit has added to the complexity of supply chain risk and the volatility of economies worldwide; there is no roadmap to understand Brexit-related risk. As we enter what will be a long transition period, having a transparent view of supplier and partner relationships will be a crucial first step to identifying and eliminating risk. With change the only constant, we look at the impact of Brexit and the role that data can play in avoiding risk and ensuring supplier transparency at a time of uncertainty.

2019 spells risk and uncertainty

The impact of Brexit remains unknown, but every single supplier must prepare for the eventual impact, be it political, economic or otherwise. Every industry from retail and automotive, to agriculture and chemicals & plastics will need to be wary of risk in how they conduct business; 2019 will be a critical year for the country, the businesses that operate within it and the suppliers that those organisations work with.

Leaving the EU is forcing UK businesses to re-think their strategy and, in some cases, prompting kneejerk reactions. One thing hasn’t changed though – different industries have different levels of exposure to risk. Our latest report, published alongside Cranfield School of Management, found that financial services – specifically finance, insurance and real estate businesses – have the highest risk when compared to manufacturing or wholesale, for example.

In order to mitigate risk, larger financial organisations are spending billions of their budget on regulatory processes like Know Your Customer (KYC). While this is an important step, it’s not enough on its own. As Brexit could make both short- and long-term growth harder to come by, what can a business do to ensure transparency and offset risk?

Being a data doyen

Given the need for deeper due diligence, access to data is the best way a business can accurately screen partners, mitigate risk and protect its reputation. Unpredictable events from erratic exchange rates to new rules and regulations can have a severe impact on unprepared operations. But through internal data and accessible third-party information, companies can prepare for change and still grow.

Imagine if a critical supplier was close to going bankrupt but a company didn’t know and had not prepared for the eventual impact on its supply chain. Insight into the supplier’s profit/loss margins could flag the issue ahead of time and recommend that a business cuts ties with the supplier. This would not only save money but also protect that company’s reputation.

Mastering your data

Given how quickly data changes, it is no wonder organisations are struggling to keep up. However, when it is connected to disparate systems, it can result in high levels of inaccuracy and errors across a database. Smart companies can avoid this by creating one source of truth across the entire organisation that can increase efficiency and reduce costs, whilst also ensuring the best practice in third-party risk management.

This is where master data becomes fundamental to a business. A master data strategy enables organisations to agree upon a common data structure, connect that data across systems and enforce governance policies for the creation of clean and complete data. It can help a business gain control and unite all information siloes with a common understanding based on a consistent set of data. For organisations that want full insight into a supply chain – partners, customers and vendors – this is the only true way to have access to accurate and actionable information.

Failure to prepare is preparing to fail

Gaining transparency in the supply chain is critical to manage the rising level of risk during periods of uncertainty, as external business relationships attract increasing legal, regulatory and consumer scrutiny.

Now more than ever, businesses need to prepare for every possible scenario. And having a data-led approach is a great way to help avoid the potential risks of Brexit. By using data, businesses can identify and screen potential suppliers and gain visibility into ownership structures of their current suppliers, resellers and distributors, successfully mitigate risk and grow businesses during periods of uncertainty.

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