Data is the New Oil: Managing financial and credit-related risk

This is an excerpt of the original article. It was written for the September-October 2017 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2017

When it comes to the next generation of supply chain management, the future just may be now. That’s one of the conclusions reached by Greg Gorbach, an analyst at the research firm ARC Advisory Group, after surveying supply chain executives, including subscribers to Supply Chain Management Review, on the digitization of their supply chains. In “The Great Digitization of Industry,” Gorbach notes that while it may take years for the widespread adoption of new technologies such as machine learning, additive manufacturing, smart factories and advanced analytics to become commonplace, digitization across verticals is happening faster than many of us…

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It doesn’t take a tsunami, flood, cyber attack or geopolitical instability to disrupt a supply chain. In some cases, all it takes is one Tier 2 supplier to file for bankruptcy—or one plant fire at a Tier 1 vendor’s facility—to reduce the integrity of the entire global supply chain, damage the firm’s brand and send its customers look¬ing for other suppliers. In the absence of an accurate crystal ball, many companies are turning to software and technology platforms focused on credit and financial risk to help them navigate the maze, stay informed and make good decisions.
Supply chain disruption happens

According to the Business Continuity Institute, supply chain resiliency isn’t exactly top of mind for today’s organization. In its most recent Supply Chain Resilience Report (2016), BCI says that 70% of companies surveyed experienced at least one supply chain disruption over the prior 12 months, and that 34% (up from 15% in 2015) attribute those lapses to “disruptions from their external, inbound supply chains.”

“This underscores the strong dependencies of organizations to their suppliers which may prove to be a point of failure if left unmanaged,” BCI points out in its report, which pinpointed loss of productivity, customer com¬plaints, impaired service outcomes, brand/reputation dam¬age, and revenue losses as the biggest problems caused by the disruptions.

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