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A major pharmaceutical company gains complete visibility of supplier risk with The Smart Cube
US multinational pharmaceutical giant
Supplier Risk Intelligence
- Mapped thousands of suppliers with 500 parent companies (ultimate suppliers) for greater visibility into aggregated risk and spend
- Consolidated data from different risk data vendors to create a comparable view of risk across suppliers and categories
- Regularly monitored risk events for 4,000 suppliers and delivered insights through an intuitive dashboard used by every category manager
- Leveraged market expertise and category intelligence to improve understanding of the client’s risk landscape
Changing attitudes to supplier risk
From natural disasters and socio-political events to price escalation and raw material disruptions, there are so many things that can disrupt supply chains and impact procurement – and many of them are not easy to predict.
If not managed properly, supply chain risks can impact business continuity, product quality, compliance, price competitiveness, savings opportunities and more. But, in complex supply chains, you can only manage risk if you have in-depth insights into your suppliers. In most cases, those insights are lacking.
Today, 50% of procurement teams have ‘low to moderate’ visibility into their tier one suppliers. A full 85% of businesses simply don’t have the capability and capacity to manage their third-party risks.
This is because supplier risk management has historically been a bit of an afterthought; a reactive process rather than a proactive one. Suppliers are often only thought about if something has gone wrong. Or, they’re reviewed once or twice in a year and not tracked in between. Another common issue is fragmented information and data, whereby companies may gather a lot of data but don’t connect the dots.
When COVID-19 struck in 2020 and disrupted almost every industry in the world, it became clear to many organisations that this level of insight was no longer adequate, and supplier risk management would have to change.
A pharma giant reacts to the pandemic
Our client, an American multinational pharmaceutical giant, was one of these organisations. In the wake of the pandemic, it realised the importance of having better visibility into the risks posed by different suppliers – and knew it had to act fast.
Like most organisations, the company’s risk assessments were based on historical financial data or credit risk ratings, and couldn’t even begin to reflect the reality of the situation during the pandemic.
A further complication was that risk assessments from two different data providers had created an inconsistent view of risks across different suppliers and categories. Different metrics and scales were used to measure risk. And suppliers and their subsidiaries weren’t mapped to each other, which made it impossible to assess aggregate risk.
Ultimately, a patchwork of insights created limited visibility into the risks tier one suppliers posed. And even less into those in tiers two and three.
The client already had a decade-long relationship with The Smart Cube, relying on our trusted, high-value category intelligence to support decision making across its teams. To help improve supplier risk, it turned to our Supplier Risk Intelligence solution.
The Smart Cube’s Supplier Risk Intelligence
Supplier Risk Intelligence from The Smart Cube allows procurement professionals to identify, monitor and mitigate third-party supplier risk to ensure business continuity, quality and performance compliance, and cost savings.
At the core of the solution is the Smart Risk platform for ongoing risk monitoring, which leverages advanced analytics and machine learning to alert clients to emerging risks before they fully materialise. Custom reports and dashboards build on this to provide in-depth view of a risk event or to mitigate its impact – all driven by our risk and category specialists.
As with all of our solutions, no two deployments are the same. Supplier Risk Intelligence can either be used as an end-to-end solution, or to plug the gaps left by existing systems and processes the client is already using. We design a custom solution based on a client’s business context, incorporating all relevant data and intelligence sources.
Already employing two risk data feeds, our client didn’t want a third. But it did want to meet some requirements its existing solutions weren’t able to deliver.
With The Smart Cube’s help, the client was able to quickly aggregate spend data across suppliers, categories and geographies, linking subsidiaries to their parent companies and their geographic bases, to provide an accurate view of spend and dependencies across 500 ultimate suppliers.
The Smart Cube also helped to make the data provided by the client’s existing risk intelligence vendors comparable, and enriched it further using additional data and insights on key markets and COVID impact by country to provide greater visibility.
All of this information was presented through an interactive dashboard that combines historical and current data to provide quarterly risk focused insights into 4,000 individual suppliers.
Elevated insights and actionable intelligence
The insights in our quarterly dashboards have proven to be of enormous value to our clients’ category managers, combining what were disparate and unrelatable data sources into elevated insights and an accurate, timely map of its threat landscape.
With full visibility into which individual suppliers belong to which parent companies, how much is being spent where, and what changes could likely impact the supply chain, our client can now make more accurate strategic decisions.
“With this level of insight, we now have a complete view of the risks represented by our suppliers,” said one category manager. “It’s been invaluable in allowing us to make more strategic sourcing decisions and helping us to mitigate risk in a time when predicting almost anything can prove a monumental challenge.”
As a result of this project, the client has asked us to use the same techniques to help map its tier-two and tier-three suppliers – ultimately providing vital risk intelligence for its entire supply chain.
Our experience tells us that fragmented information and data sources are a common problem in big companies, and one that prevents a consistent and accurate view of activities.