What are the greatest challenges at the moment in creating resilient supply chains? And how can I minimise risks in my supply chain? We conducted an interview with Stuart Swindell, Senior Product Director at Dun & Bradstreet, and Christin Schmidt, Senior Consultant for ESG and Compliance at Dun & Bradstreet, in which the experts explained what companies really need to pay attention to when looking to establish a resilient supply chain.
Whether the coronavirus pandemic, the war in Ukraine, inflation or climate disasters – the last few years have shown just how quickly supply chains can break down. Ever stricter regulatory requirements are also presenting new challenges. Due diligence obligations in the context of ESG (Environmental, Social and Governance), preventing money laundering and KYC (Know Your Customer) requirements go far beyond their own company boundaries. Indeed, legislators are compelling companies to understand ownership, defend human rights and secure environmental protection throughout the entire supply chain. The ability to create resilient supply chains has therefore become a key factor for global companies that wish to stand out from the crowd.
Stuart, why does data play such an important part when seeking to establish resilient supply chains?
Stuart Swindell: Having precise data enables companies to reach agile decisions and react to new market conditions. The better companies know their own suppliers and the more data they have on them – whether firmographic or related to compliance, the better they can then estimate risks and take the necessary action to prevent supply bottlenecks or product downtimes.
In a nutshell: data helps companies locate the greatest risks in their supply chain, so that they can then react appropriately to these.
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What’s the best way to identify risks in the supply chain?
Christin Schmidt: We recommend a risk-based approach. The key question here is: where are the greatest risks in my supply chain?
For example, if a company orders 30 percent of its parts from suppliers based in China, it will unquestionably need country data on China. The economic and political situation in a country can ultimately have a major influence on the suppliers located there. However, financial, ownership, screening, and industry data on the company’s suppliers is just as important. In addition, Dun & Bradstreet offers shipping insights, which indicate how punctually goods are delivered and offers traceability on the movement and sale of goods. It’s all about getting the right combination of data, the right mix.
Stuart Swindell: Dun & Bradstreet’s data cloud contains rich information on more than 500 million companies around the world. This data can be used to make a well-founded statement on a supplier's stability – whether economic or otherwise.
Companies across the globe can be uniquely identified via the Dun & Bradstreet D-U-N-S® number. Among other things, this can be used to surface information on financial risk, corporate affiliations of suppliers, ownership structures, the sector in general and much more, which helps you visualise the organisational structure of your suppliers, while maintaining an overview of how companies within corporate groups interact with one another.
What other data should supply chain managers use when performing a risk assessment of suppliers?
Christin Schmidt: Alongside traditional master data and financial data, ESG data is particularly important for supplier risk assessments. ESG data helps us understand performance in relation to environmental standards, human rights, governance or occupational health and safety. It represents an important aspect, particularly with regard to a company’s compliance and reputation. Dun & Bradstreet provides ESG data on more than 73 million companies across the globe.
How can I use data to minimise the risks in my supply chain?
Christin Schmidt: Data can show us where the greatest risks are located in the supplier portfolio. These risks must then be evaluated and suppliers can be assigned the red (high risk), amber (medium risk) or green (low risk) status accordingly. This risk rating helps create a clear picture of where action is required to make the supply chain more resilient. For example, where must I keep an eye out for an additional supplier that can fill in if my other supplier suddenly drops out? Where am I open to political or financial risk?
Stuart Swindell: Data can be used to inform proactive future-planning and overall company growth, bringing the procurement team to the fore. Illuminating trends, tracking changing risk levels and identifying categories that need closer monitoring is all key. Sharing these insights with wider teams within the business helps in making the right decisions before disruptions occur. Furthermore, understanding company hierarchies, linkages and ownership can strengthen negotiating positions and optimisation of spend.
In your opinion, what are the key success factors for a resilient supply chain?
Schmidt: Data, data, data. Using this information is the most efficient way to detect risks and spot opportunities in the supply chain.
Stuart Swindell: Establishing a closer relationship with suppliers is definitely another important aspect. The better I know my direct suppliers, the better I can begin to understand my tier 2, tier 3 and tier n suppliers. This is a key factor on the road to creating a resilient supply chain.
Discover how you can make your supply chain more resilient in just five steps. Download our checklist and discover:
- What you need to do to keep your supply chain resilient at reasonable cost, even in the face of disruptive conditions.
- What you should consider when seeking to establish risk-oriented supply chains.
- What you should always consider when selecting your suppliers.
- How data can support you in making your supply chain more resilient.