At Risk of Supplier Failure? 5 Questions to Ask Yourself by ProQuest

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									final thoughts                                                                                                                                                       Procurement


At Risk of Supplier Failure?
5 Questions to Ask Yourself
By Jim Lawton
         anufacturers need suppliers they can count on – that’s nothing       and gain the information needed to truly understand supplier stability.

M        new. For most companies, this simple truth is at the heart of
         supply chain strategies: driving selection decisions, relationship
terms and, in some cases, critical business decisions, such as new
                                                                                 5. How are you ensuring compliance and driving bottom-line
                                                                              results? The concept of “supplier noncompliance” rarely makes
                                                                              headlines in those exact words, but the following phrases do: tainted
product development or network design. But today’s commodity                  products, declining quality, late shipments and over-invoicing. Existing
price volatility, credit crunch and overall economic instability expose       solutions, such as procure-to-pay, e-sourcing, contract management and
a real gap in many manufacturers’ supplier initiatives: What’s being          spend visibility, can be helpful but alone are insufficient. Automating
done to mitigate exposure to supplier failure?                                the administration and tracking of supplier credentials, certifications,
   Risk management generally lives elsewhere in the organization, most        financial and operational health – on a global scale – is essential to
often in finance. But in the past few years, supply chain organizations       avoid noncompliance-related crises.
have begun to recognize the need for more visibility into supplier risk.         The current economic crisis is escalating the call to action for supplier
To evaluate how well you are assessing the risk of your supply base,          risk management, with an emphasis on predictive ability that ensures
there are certain questions to ask yourself, your company and your            longer lead times for response and minimizing disruption. Manufacturers
suppliers to ensure that you can keep products moving to customers            that create robust strategies and processes for managing supplier
while waiting for the economy to right itself.                                information, monitoring overall financial and operational stability,
   1. How much do you really know about your suppliers? At                    and establishing early-warning systems for alerts when conditions or
best, visibility into basic spending data is an innocuous way to drive        parameters change will find that the gap on risk exposure can be closed
sourcing strategies. At worst, failing to combine it with other types of      – for better performance today and in the long-run.
information about suppliers, such as financial/banking information,
on-boarding status, performance, sustainability and diversity, can            About the Author: Jim Lawton is vice president and general
lead to financial loss, negative headlines or, worse, customers who           manager of D&B Supply Management Solutions. More information
go to your competition.                                                       at www.dnb.com.
   2. Where does the information on supplier relationships live?
Odds are good that important information is scattered throughout                   Ad Index
your organization and outside of it as well. Internally it is in both           American Public University ............................................................. Page 42
structured formats within enterprise resource planning (ERP) and                Bottomline Technologies .......................................................................... 40
materials resource planning (MRP) systems and unstructured formats              CDC Software ............................................................................................ 10
such as PDF or text-based credentials. It is no wonder that bringing            CDC Supply Chain .................................................................................... 39
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