Interview with riskmethods' Bill DeMartino
DPW spoke with Bill DeMartino, Chief Product Officer and MD Americas of riskmethods about how to build supply chain resilience through sub-tier visibility and collaboration within the supply network, and how automation and digitization play important roles.
Supply chain resilience is on executive agendas, and with good reason. The coronavirus pandemic, as well as also events such as the Suez Canal blockage, and emerging shortages in a range of industries, continue to disrupt global supply chains.
Why is sub-tier visibility so important for building supply chain resilience?
DeMartino: Put simply, when it comes to risk in your supply chain, you can’t manage what you can’t see. But first things first. Managing risk is essential for supply chain resilience, so implementing a robust supply chain risk management program is top priority. Establishing visibility of the inherent risk of your suppliers and sub-tiers builds on that. You are immediately able to see the risk profile of a supplier, along with any emerging threats in your supply chain. Once you have identified risks and vulnerabilities, also through the lower tiers, real-time monitoring will keep you informed of the ongoing status. You can prepare for and react faster to events.
Visibility coupled with collaboration lets you control your risk exposure, because it’s co-managed by your risk-enabled supply network. This provides earlier and more precise risk insights - and your trading partners are also better prepared for incidents that may come their way, making the entire network more resilient. So, you improve relationships with suppliers who are key to your success. That’s why having an overview of all supply network levels is a critical step towards achieving greater resilience. It allows you to extend all aspects of the risk management process to your broader supply network, including third parties and subcontractors.
What has made gaining sub-tier visibility so difficult up to now?
DeMartino: Despite digitalization of many aspects of sourcing and procurement, attempts for gathering supplier and sub-tier data are mainly still ad-hoc and highly manual. The approach most used by customers is sending out questionnaires to their suppliers. Not only does this method tend to provide poor results for the effort involved, it reinforces having one entity make demands without offering reciprocal benefits.
Suppliers often had little incentive to participate, nor saw a disadvantage in opting out. The shift in the approach recommended by riskmethods is that customers and business partners collaboratively manage risk within the supply network, so that both parties receive immediate value. Suppliers gain real-time risk insights into their own supply chains, which is already empowering. They also improve their risk awareness, and can begin managing their own risk, helping them to become even more attractive to their customers.
How do automation/digitalization and collaboration play a role in achieving sub-tier visibility?
DeMartino: Technology is the key to make these efforts efficient, relevant, and secure. Within the entire network, an enormous amount of risk data is available. Yet organizations must be able to filter this data and uncover specific insights. Here you need an artificial intelligence-based solution that shoulders this workload with ease, and filters out the data relevant to the business.
Automating risk management and digitizing processes for collecting supplier data also saves time and effort for procurement and supply chain professionals. And technology makes the collaborative aspect possible, while allowing fine-grained control to alleviate many of the concerns of security or competitive insight.
What kinds of benefits can enterprises expect from increasing visibility and thus strengthening resilience in their supply chains?
DeMartino: Understanding the threats and vulnerabilities throughout your supply base helps you manage risk proactively. With sub-tier visibility, enterprises can find out about potential disruption, supply bottlenecks (diamond risk), or shortages before these become urgent. You are able to prepare countermeasures in advance, so you speed up risk mitigation. Additionally, through increased supply chain transparency, you meet compliance requirements.
Gaining visibility into all levels of the supply chain builds resilience. By making your supply network more resilient, you reduce or avoid the costs and consequences of risk, and maintain business continuity.
For more on how to achieve sub-tier visibility, the role of automation and collaboration, and the benefits of greater transparency, read the riskmethods whitepaper: How Sub-tier Visibility Strengthens Supply Chain Resilience.