Category Archives: Risk Management

Coupa Software: four tips for reducing supply chain risk

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Coupa Software: four tips for reducing supply chain risk

Coupa Software: four tips for reducing supply chain risk

The cloud platform for business spend management, Coupa Software, drives “Value as a Service” by helping customers to achieve significant cost savings.

As is the case with every supply chain, there is always risks that must be considered. These risks could be financial, cyber, legal or fraud and business leaders have a responsibility to consistently work to overcome these risks. Coupa has compiled four spend management decisions to help cut supply chain risk.

1. Automate compliance verification

In order to decrease risk in company’s supply chains, organisations must ensure is audit-ready and fully compliant. There’s an importance to ensure every vendor is compliant with relevant standards and observe the tolerance for risk. The process includes checking vendor credit ratings, financial liabilities, legal judgements as well as other details.

2. Utilise the insights of the business community

With some companies undergoing regular checks on its vendors to obtain credit reports from third-party sources, best-of-breed business service management (BSM) technology accelerates this. Based on a range of sources such as income statements, court documents and news articles, BSM algorithms quantifies financial, judicial and public sentiment health of each supplier.

3. Enable real-time visibility for spend-at-risk

Recognising and understand the risk that comes from each supplier is vital to ensuring information is married with the actual spend of the organisation. In the supply chain space, being proactive is key due to the pace of which the world moves. By operating with an agile approach, it allows businesses to adapt to situations that weren’t accounted for, such as trade sanctions, currency fluctuations and natural disasters.

4. Control in-flight transactions to mitigate risk

The importance of supply availability is key. Understanding and identifying these risks before they develop is vital to ensuring businesses protect guard against such threats. BSM processes should enable clear visibility of transactions that are linked with supplier risk.

Read more at Coupa Software: four tips for reducing supply chain risk

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Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

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Predicting a Recession

It’s overdue. Predicting the onset of a recession is difficult, but a downturn likely will arrive soon, with the current economic expansion now more than 10 years old, long by historical standards.

Signs of overleverage in the corporate sector, combined with geopolitical uncertainty – including the China-US trade war, Brexit and economic instability in some European countries – suggest the next recession is not far off.

For corporate leaders, however, the exact timing and duration of a recession matter less than being ready to seize the moment early, when they have more options. Getting ahead of the curve avoids the painful alternative – being forced to react hastily in a crisis. Bain & Company research shows that well-prepared companies emerged as winners during and after past recessions. They managed a strong defense and offense in parallel, reining in costs while simultaneously reinvesting in growth.

The next downturn will figure as just one element roiling the global economy. Several structural changes will combine to sound the starting gun to a new business cycle, including:

The end of the nontech business.

An array of evolving technologies will substantially alter customer behavior and demand in many sectors, disrupting both volume and price. In the automotive industry, shared mobility services and the shift to autonomous and electric vehicles could gut the economic returns of many manufacturing plants and assets in six to eight years – just one product cycle. In retail, digital-first insurgent brands with healthy balance sheets may take even more market share in a downturn, compounding the damage to many traditional retailers.

At the same time, new technologies are ramping up efficiencies in areas such as supply chain and manufacturing. Automation technologies, in particular, will accelerate to help companies address the dwindling supply of labor as more baby boomers move into retirement and labor force growth slows.

The end of low-interest rates.

Interest rates still hover near a six-decade low (see Figure 1). Even if central bankers hold rates low during a downturn to help stimulate their economies, we expect to see rates eventually rise. This potential change in the interest rate environment will be a new regime for most management teams and should prompt them to take a multiyear view of their capital structure and the timing of investments. A higher cost of capital will put pressure on capital spending, so if companies want to invest in technology, growth opportunities or acquisitions, the time is now.

Downturns Upend the Playing Field

These long-term trends will harden the divide between winners and losers, favoring those who act before the downturn. Headed into the global financial crisis a decade ago, a group of almost 3,900 companies worldwide that we ran through Bain’s Sustained Value Creators analysis posted double-digit earnings growth, on average, from 2003 to 2007. As soon as the storm hit, performance diverged sharply: The winners grew at a 17% compound annual growth rate (CAGR) during the downturn, compared with 0% among the losers. What’s more, the winners locked in gains to grow at an average 13% CAGR in the years after the downturn, while the losers stalled at 1%.

Read more at Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

Gravity Supply Chain Solutions: Mitigating the risks of trade wars and tariffs

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As trade wars heat up, businesses need to protect their profit margins from increased tariffs. Gravity Supply Chain Solutions CEO, Graham Parker, explains how this can get achieved by digitising the supply chain.

Optimism over an end to the trade war between the U.S. and China seems to have grown further following an extension to the original 90-day trade deal truce, which was due to expire at the beginning of March. However, the U.S. government alleges that the CFO of the Chinese telecoms giant, Huawei, has broken U.S. trade sanctions, and accuses the company of acting as a backdoor for the Chinese government to access U.S. trade secrets, subsequently passing a law that bans federal agencies from buying their products. Huawei, in return, now intends to sue the U.S. government.

In the wake of these allegations, growing hostilities between the two nations could result in trade wars intensifying yet again. For businesses, this would likely mean more rising tariffs. The immediate impact of the tariffs is that they make it more expensive for American companies, manufacturers, retailers, and suppliers, to import products or raw materials from China. American firms will also find it costlier to export goods into China.

China is the largest trade partner of the U.S. according to the U.S. Census Bureau, which estimated that bilateral trade between China and America, reached US$636 billion in 2017, and given this fact, it is highly likely that the reciprocal tariffs will increase the costs of a large proportion of U.S. based companies.

Many noteworthy U.S. corporations have already attested to this fact. For example, General Electric stated that new tariffs on its imports from China could raise its costs by US$300 million to $400 million. Caterpillar claimed U.S. tariffs on imports from China would increase its material costs by around US$100 million to $200 million in the second half of the year.

Read more at Gravity Supply Chain Solutions: Mitigating the risks of trade wars and tariffs

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Four Steps to Building a Global Chain Risk Management Platform

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Be proactive – and significantly reduce global supply chain risks, discover the 4 steps to building a global supply chain risk management platform in a white paper from Avetta.

A global marketplace presents a complex set of challenges, especially when attempting to maintain a safe and sustainable working environment for your employees, contractors, and suppliers.

A minor detail, if left unresolved on the front end, can explode into a financial or operational disaster.

But the implementation of a world-class risk mitigation solution can save time, money, and even lives.

It’s critical to have the plans, resources, and technology in place that verify credentials, measure financial stability, and encourage sustainable business practices.

A proven supply chain risk management partner can ensure that your program is configured efficiently, intuitively, and effectively.

Save your business from negative impacts to its revenue and reputation by taking the right steps to minimize global supply chain risks.

In this white paper from Avetta, you’ll learn the keys to successfully managing your supply chain, protecting it against avoidable situations, and recovering from unforeseen disasters.

Find out how to better equip your business to prevent:

  1. Incidents caused by under-qualified or untrustworthy contractors or suppliers
  2. Injury to employees, contractors, suppliers – and the obligation of medical expenses associated with them
  3. Direct costs such as damaged goods and materials, machinery repair, and insurance deductibles
  4. Indirect costs including revenue loss from brand damage, employee and supplier down time, production delays, and fines

Read more at Four Steps to Building a Global Chain Risk Management Platform

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The Emerging Business of Supply Chain Risk Management

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For many organizations, globalization, outsourcing, and extended supply chains are effective strategies to increase efficiency and achieve economies of scale, however, these benefits are accompanied by the significantly increased risk to quality, safety, business continuity, reputation, and more.

Is Your Company Safe to Work With?

As reported by Forbes, there’s an emerging category of business – supply chain risk management – of which many companies aren’t yet aware.

For the largest companies, this is a jugular area – imagine the exposure of a large oil company or a large online retailer when a supplier they’ve contracted with makes a mistake or even causes an all-out disaster? (Think oil drilling contractor, for example.)

Risk Management Overview

For many organizations, globalization, outsourcing, and extended supply chains are effective strategies to increase efficiency and achieve economies of scale.

However, these benefits are accompanied by the significantly increased risk of quality, safety, business continuity, reputation, and more.

Identifying Risk in the Supply Chain

Organizations are always at risk for losses through cost volatility, supply disruption, non-compliance fines, and safety incidents that cause damage to their brand and reputation.

Knowing what’s at stake is the first step to understanding, measuring, and managing risk in your supply chain.

Supply Chain Safety

Among the highest priorities for companies across all industries, safety concerns are often magnified in chemical, oil and gas, construction, and manufacturing.

Workplace accidents can jeopardize contracts, result in fines, and cause significant damage to a company’s reputation.

Supply Chain Quality Control

Do your vendors and suppliers meet your standards for quality and consistency?

Customers are quick to react when they perceive a drop in quality; and, even the smallest product issues can be difficult to recover from.

Supply Chain Financial Challenges

Any disruption to the supply chain due to financial challenges has the potential to impact business continuity and, ultimately, your bottom line.

Taking a proactive approach to understanding supplier financial strength can prevent disruption and unnecessary costs.

Supply Chain Compliance

Are your contractors insured? Do they have the right type of insurance, the right limits?

Knowing this information will help you to manage insurance risk and avoid potentially costly litigation.

Supply Chain Reputation

Damage to a company’s brand or reputation can be long-lasting, extremely costly, and sometimes unrecoverable.

Committing to a supply chain risk management strategy can not only prevent brand damage but can also serve to foster new partnerships with organizations that share like values.

Supply Chain Sustainability

It’s no longer enough to assess risk within the traditional construct of a supply chain.

Organizations must look beyond and consider environmental impacts and corporate social responsibility, including adherence to labor laws and sustainable practices.

Read more at The Emerging Business of Supply Chain Risk Management

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The Impact of Hurricanes on Transportation and How to Build a Storm Resilient Supply Chain

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This report looks at data before and after Hurricane Harvey in August 2017 and dives into the true cost and volume impacts experienced by logistics customers; it also shares advice on how shippers can prepare for another 2018 challenging storm season.

2017 Tropical Storm Harvey

Hurricanes have massive impacts on transportation capacity and spend.

To better understand true cost and volume impacts, Zipline Logistics evaluated a sample of 33,000 shipments, comparing data prior to the 2017 Tropical Storm Harvey with data after the event.

Access the full report and keep reading this post for the advice you can use to prepare your supply chain for the next tumultuous storm season (Note: the Atlantic Hurricane season runs from June 1 through the end of November.)

Hurricane Impacts on Transportation

We leveraged our KanoPI shipper intelligence platform to dig deep into hurricane impacts. Here’s what we found;

Market surcharges due to hurricane activity were the costliest of added fees in 2017 with a total cost of $673,000.91.

Data shows that the Average Cost Per Load after the 8/26 hurricane went up by $159.58, or 11% and that the Average Cost Per Mile increased by 15%.

915 fewer loads moved after the hurricane (date of 8/26/2017) when compared to previous four-month period. This tells us that people were holding on to shipments that would typically have moved into key areas like Florida, Texas, and surrounding states.

Looking specifically at Florida, there was an 8% drop in volume and 3.4% drop in spending. This shows that for shipments still moved, rates were higher.

Read more at The Impact of Hurricanes on Transportation and How to Build a Storm Resilient Supply Chain

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How To Avoid a Third-Party Break in Your Supply Chain

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Your business is only as secure as the weakest link in your supply chain. A single lapse by a third-party can lead to an operational disruption, cyberattack, or compliance violation. How can you be certain that your vendors and partners are keeping up with the latest regulatory mandates, industry best practices, cybersecurity measures, and your own corporate standards?

Vendor Risk Management Should Be a Top Priority

In these days of high-profile data breaches and intensifying regulatory requirements, supply chain risk management has become a critical priority for every organization. Such programs typically encompass policies, standards, governance, and risk assessment. Vendor risk management falls under the last of these—and it’s the cornerstone of effective supply chain risk management.

Develop a Vendor Risk Policy with Teeth

Nothing gets the attention of a vendor like a withheld payment. To set the expectation that risk policy compliance is a requirement, not an option, let vendors know that no money will be released until the right boxes have been checked.

Document and Track

A supply chain risk register is essential to keep track of your vendors and their risk. Your database should provide a single source of information on which vendors have been approved and when, as well as their current risk assessment rating.

Stay Engaged During Procurement

Don’t wait until the final review of a master services agreement (MSA) to get involved. Build a strong collaborative relationship with the procurement team so you can be notified promptly when a business function submits a procurement request, and stay engaged during vendor sourcing. By getting in front of the process, you can avoid being labeled as a roadblock or deal-breaker.

Maintain, Scale, and Repeat Your Program

Running an effective vendor risk management program and managing supply chain risk in general is all about scaling and repeating. To uphold your policy and standards, be diligent and strict about annual security assessment and verification, and perform site inspections as needed depending on the severity of risks posed by a given vendor.

‘Trust But Verify’

From the earliest stages of the procurement process through onboarding, service provision, and offboarding, expectation-setting and verification should be woven through each vendor relationship. Even the most secure organizations can encounter challenges, and the best-run programs can break down—assume nothing, check everything.

Read more at How To Avoid a Third-Party Break in Your Supply Chain

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The Right Solution for Contractor and Supplier Management

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The benefits of outsourcing to suppliers and contractors is clear, but the associated risks are largely unseen, and the breakneck pace of change and the pressures of financial reality can cause important, risk-mitigating considerations such as contractor safety to be overlooked – which could be not only an ethical disaster but a business disaster as well.

Choosing the right solution

Contractors and suppliers can provide many essential benefits to businesses such as expertise, efficiency, and cost savings.

In addition, companies working with contractors and suppliers can scale their business up and down depending on market demand.

The benefits of outsourcing to suppliers and contractors is clear, but the associated risks are largely unseen.

To add fuel to the fire, the breakneck pace of change and the pressures of financial reality can cause important, risk-mitigating considerations such as contractor safety to be overlooked – which could be not only an ethical disaster but a business disaster as well.

Contractors working on your site and suppliers providing materials should be considered internal employees.

If contractors are injured on the job, it can seriously damage your organization’s reputation and impede your growth.

To maximize the benefit and minimize the risk of these relationships, companies and their suppliers must commit to a common culture of safety.

This means companies need to stay engaged with their contractors beyond simply hiring them. Companies should:

  1. Regularly collect information from their suppliers that demonstrate a commitment to safety such as incident rates (lagging indicators) and safety programs (leading indicators).
  2. Continuously monitor suppliers’ insurance coverage to protect the company in case something does happen.
  3. Audit worksites on a consistent basis to ensure that safety policies are enforced.
  4. Monitor the condition of equipment that contractors use to carry out their jobs.
  5. Ensure each contracted worker has the proper licenses and certifications to perform the job safely.
  6. Provide site-specific training required for each position.

Read more at The Right Solution for Contractor and Supplier Management

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Enabling Resilience in National Critical Infrastructure

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Growing concerns related to dependencies on software-reliant information communications technology (ICT) and Internet of Things (IoT) devices are pushing changes in governance associated with supply chain risk management (SCRM). The possibility of disruption of critical infrastructure exists because the software that enables these capabilities is vulnerable and exploitable.

Exploit potential is often more about the vulnerability of assets in target organizations than the ingenuity of the attackers. Several breach reports show that the source vectors of attack are in software. Consequently, organizations expanding the use of network-connectable devices need comprehensive software security initiatives to address weaknesses resulting from technological vulnerabilities and a lack of “cyber hygiene” (lack of caution) among those who develop and use software applications and software-reliant IoT devices.

Exploitable weaknesses, known vulnerabilities, and even malware can be embedded in software without malicious intent. Indeed, sloppy manufacturing hygiene is more often the cause of exploitable software. Such poor hygiene can be attributed to the lack of due care exercised by supply organizations with developers, integrators and testers who are often unaware of or untrained on software security, compounded by inadequate testing tools and the failure of suppliers to prioritize addressing the risks associated with the poor security of the software they deliver to the organizations that use it.

How do organizations proactively protect critical infrastructure from being the victim of software provided by others? As a start, they use contracts to set supply chain expectations for their suppliers. Sample software procurement language is available for free to assist organizations in developing their contracts and establishing test criteria as part of software SCRM due diligence. Procurement criteria should contain these specifications, at a minimum:

  1. Software composition analysis of all compiled code found in the supplier product to identify all third-party open source components via a software bill of materials and to identify all known vulnerabilities listed in Common Vulnerabilities and Exposures (CVE) in publicly available databases, such as the NIST-hosted National Vulnerability Database (NVD);
  2. Static source code analysis of all available source code found in the supplier product to identify weaknesses listed in Common Weakness Enumeration (CWE);
  3. Malware analysis of supplier-provided software to determine whether any known malware exists in that software, along with a risk assessment of mitigation controls;
  4. Validation of security measures described in the product’s design documentation to ensure they are properly implemented and have been used to mitigate the risks associated with use of the component or device.

Read more at Software Supply Chain Risk Management: Enabling Resilience in National Critical Infrastructure

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The Impact of Hurricanes on Transportation and How to Build a Storm Resilient Supply Chain

Posted on by

This report looks at data before and after Hurricane Harvey in August 2017 and dives into the true cost and volume impacts experienced by logistics customers; it also shares advice on how shippers can prepare for another 2018 challenging storm season.

Hurricanes have massive impacts on transportation capacity and spend.

To better understand true cost and volume impacts, Zipline Logistics evaluated a sample of 33,000 shipments, comparing data prior to the 2017 Tropical Storm Harvey with data after the event.

Access the full report and keep reading this post for the advice you can use to prepare your supply chain for the next tumultuous storm season (Note: the Atlantic Hurricane season runs from June 1 through the end of November.)

Hurricane Impacts on Transportation

We leveraged our KanoPI shipper intelligence platform to dig deep into hurricane impacts. Here’s what we found;

Market surcharges due to hurricane activity were the costliest of added fees in 2017 with a total cost of $673,000.91.

Data shows that the Average Cost Per Load after the 8/26 hurricane went up by $159.58, or 11% and that the Average Cost Per Mile increased by 15%.

915 fewer loads moved after the hurricane (date of 8/26/2017) when compared to previous four-month period. This tells us that people were holding on to shipments that would typically have moved into key areas like Florida, Texas, and surrounding states.

Looking specifically at Florida, there was an 8% drop in volume and 3.4% drop in spending. This shows that for shipments still moved, rates were higher.

Hurricanes brought prolonged delays. Looking at the data, we can see that average transit days went from 2.65 to 2.95, which is an increase of 10.17%.

Read more at The Impact of Hurricanes on Transportation and How to Build a Storm Resilient Supply Chain

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