Assessing Your Supply Risk Maturity to Enhance Overall Performance

Assessing Your Supply Risk Maturity to Enhance Overall Performance

Christine Ferrusi Ross, Partner & SVP, Neo Group May 28, 2015

© 2015 Neo Group Inc. Proprietary

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•  Globalization Strategy •  Sourcing •  Location Strategy •  Health Checks •  Renegotiations •  Governance

"   Since 1999, we have been helping clients accelerate benefits and minimize risks associated with global talent and sourcing.

"   We have a singular focus on the global services supply chain.

"   We achieve outcomes through deep IP, real-time analytics, globally recognized experts, proven methodologies and co-creation with our clients.

"   We focus on clients' end business goals, not global talent as an end in itself.

NEO GROUP’S SINGULAR FOCUS SINCE 1999

We deliver results through three distinct and linked solutions and services:

ADVISORY SERVICES GOVERNANCE SOLUTIONS

•  Design •  Run and Support •  Ongoing Resource,

Contract and Performance Management Services

SUPPLY MONITORING & ANALYTICS

•  Country •  City •  Supplier •  Real-Time Event Alerts •  Subscription-Based

Monitoring


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TODAY’S PRESENTER

Christine Ferrusi Ross Christine is a senior vice president at Neo Group. She’s passionate about helping clients solve complex global risk, sourcing, and supplier issues to achieve better business results. Christine has helped some of the largest companies in the world operationalize their supplier risk efforts, and she’s a recognized expert in the space. She’s been quoted in the Wall Street Journal, on CNBC, and other national media regarding supplier risk, outsourcing, and globalization.


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Ø How assessing maturity improves supplier risk’s standing in the overall organization

Ø Using a standard approach to judge the key factors of supplier risk maturity

Ø Reducing the cost of doing business and increasing transformation by increasing supplier risk maturity

AGENDA


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QUICKPOLL

QUICKPOLL

Do you assess the maturity of your supplier risk function? Poll Results:

No 28%

Did it once, but don’t continuously track 28%

Yes, we assess maturity at regular intervals 44%


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Ø See where you are and what you need to improve, objectively

Ø Communicate with stakeholders in specific, granular ways

Ø Spot gaps in your current supplier risk management practices

BENEFITS OF GREATER SUPPLIER RISK MATURITY

How Maturity Improves Supplier Risk’s Standing In Your Organization


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OPERATIONALIZE RISK MANAGEMENT PROCESS

What risks matter?

Assign responsibility for tracking and taking action on the risks

Decide the risk indicators (with specifics

like percentages, not “declining”)

Create an action plan for what to do for each risk

as it happens Track risk data

Take action as pre-determined

Feedback loop, including process changes and

supplier/contract changes

Every Organization Needs A Supplier Risk Management Process


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Ø There are several key factors that work in conjunction with a process to make risk management effective

Ø Execution is the real maturity story – the most beautiful processes, scorecards, and associated techniques won’t help you if organizational adoption is weak

PROCESS IS ONLY PART OF THE STORY


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Ø Risk identification, categorization and assessment

Ø Risk treatment

Ø Organization and team skills

Ø Collaboration with stakeholders

Ø Reporting

Ø Metrics

KEY FACTORS OF SUPPLIER RISK MATURITY


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Ø Is your risk identification bottom up or waterfall down?

Ø Do you know what you’re looking for?

Ø Do you understand how that supplier risk affects your overall business?

Ø What about actually assessing the risk? (high, medium, low? Probabilities? Etc.)

RISK IDENTIFICATION


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A FRAMEWORK HELPS

Supply WisdomSM Real-Time Risk Model

RISK RATING

NEGLIGIBLE LOW MODERATE HIGH EXTREME

SUPPLIER RISKS

FINANCIAL CLIENTS PEOPLE ALLIANCES

SERVICE CAPABILITY GOVERNANCE INFRASTRUCTURE THOUGHT

LEADERSHIP

CITY RISKS

MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE

GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE

COUNTRY RISKS

MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE

GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE

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Ø What would you do if confronted with a rising risk?

Ø Does everyone else in your company know what you’d do or would your action surprise them?

Ø Do others in your organization help you treat risk?

RISK TREATMENT


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Ø Do you have the right people to effectively manage supplier risk?

Ø Do you help them keep current on changes and on skills?

Ø Do your people have an organizational structure that helps rather than hinders working with stakeholders?

ORGANIZATION AND TEAM SKILLS


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Ø Do other teams view your group as an obstacle? As a strategic advisor? Do they think about your group at all?

Ø How would you characterize your working collaboration with the relevant stakeholders?

STAKEHOLDER COLLABORATION


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Ø Who do you tell about supplier related risk?

Ø What information do you give them?

Ø Do you give information that they can take action on?

REPORTING


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Ø How is your team measured?

Ø How does your organization measure supplier relationships?

Ø Does everyone who works with the same supplier have the same view of that supplier relationship?

METRICS


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REAL-LIFE MATURITY SCALE

1: Got nothing, just star1ng

2: Learning to walk

3: Respectable and respected

4: Bragging rights

5: King of the mountain


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Ø Standardization

Ø Effective use of technology

Ø Compliance

EXECUTION IS KEY Maturity Isn’t Just Knowing What To Do, It’s Executing On That Knowledge Consistently


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Ø Does everyone who manages a supplier use the same processes, techniques and tools?

Ø Do people follow the same process the same way every time?

Ø Does everyone use the same terminology for the same activities?

STANDARDIZATION


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Ø How much of your processes are automated?

Ø Are your tools integrated with each other?

TECHNOLOGY


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Ø The killer question: what percentage of people who manage suppliers actually follow the supplier risk processes?

Ø What kind of compliance do you have with all data collection?

Ø Compliance with tools?

COMPLIANCE


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Ø Teams have limited resources – people, time, and money

Ø Getting beyond the “we do this because we have to,” involves figuring out where you’re saving resources – lowering the cost of doing business

Ø Better risk management also means you take smarter risks, make better forward-moving decisions

TRANSFORMING THE BUSINESS Moving up the Supplier Risk Management Maturity Curve can have significant positive impact on your overall business.


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QUICKPOLL

QUICKPOLL

After today's discussion, how would you rate your own supplier risk management maturity? Poll Results:

2: Awareness, reactive actions taken on ad hoc basis 22%

3: Beginning to take proactive approach & anticipate risks 44%

4: Cross-functional, holistic approach; not fully implemented 33%

5: Fully implemented, better than 95% compliance across org 0%

1: Awareness of issue, no action taken 0%


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QUESTIONS


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THANK YOU NEO GROUP GLOBAL HEADQUARTERS 6200 Stoneridge Mall Road, 3rd Floor Pleasanton, CA 94588, USA ASIA-PACIFIC HEADQUARTERS No.13, B-2, 1st floor, C Block Embassy Heights, Magrath Road Bangalore-560 025, India AMSTERDAM, NETHERLANDS AUSTIN, TEXAS BOGOTA, COLOMBIA LONDON, UK NEW YORK, USA ATLANTA, USA SAO PAOLO, BRAZIL SILICON VALLEY, USA SYDNEY, AUSTRALIA

CHRISTINE FERRUSI ROSS Partner & SVP [email protected] 781.405.9851 www.NeoGroup.com www.SupplyWisdom.com [email protected]

Business

Assessing Your Supply Risk Maturity to Enhance Overall Performance