Mitigation of Supply Risk Using Big Data Analysis

22 Nov 2017 10th Global Supply Chain and Logistics Summit www.sclgsummit.org

Mitigation of Supply Risk Using Big Data Analysis

Presented by:

Mateusz Borowiecki, CEO - OptiBuy


9 Feb 2011

Quick Facts

Of Supply Chain executives do not have access to real time reporting

Of Supply Chain executives have limited knowledge of risk and compliance issues

Do not have complete end-to-end visibility of supply chain

Of all cyber breaches occur in the supply chain

Claims commodity price volatility as major risk concern

are concerned about quality issues and regulatory issues from supply base

Key Facts and Figures

Sources: 1) Supply Chain Risk Management: Overview for ALM Intelligence, KPMG 20162) Integrating Cybersecurity into Supply Chain Risk Management, National Institute for Standards (NIST), 2016

56%

50%

13%

80%

59%

46%


9 Feb 2011

Types of Risks

Risks

Strategic RiskTactical /

Operational RiskPolitical /

Geographic Risk

ManagementDrives

Effectiveness

ManagementDrives

Efficiency

ManagementDrives

Continuity


9 Feb 2011

Risks

High

Profit

impact

Leverage components (your bonus depends on them)

Low

profit

impact

Non-critical components (nobody cares as long as they are

there)

Low supply risk / Multiple suppliers /

simple to buy

Strategic components (everybody has an opinion how to organize

them better)

Bottleneck components(troubles ahead)

HIgh supply risk / SIngle supplier / difficult to

buy

Strategic Risk


Case 1Packing Metal Strip - Problem

Issues

Single supplier delivering single product

Occasional quality issues

Increasing price


Case 1Packing Metal Strip - Solution

Solution

Changing specification and replacing the

metal strip with the plastic strip

Much wider choice of suppliers

Became part of the portfolio of the main

packaging supplier

Bonus: price reduction of >50%


Case 2Legacy Programming Technology - Problem

Problem

One of the key IT system of an insurance

company was based on the legacy Oracle Forms

software stack

Constant issues in finding good developers

Ever rising prices of development (400

EUR/Manday)


Case 2Legacy Programming Technology - Solution

After deep TCO analysis of system’s life cycle,

rewriting of system using widely available Java

technology was decided

Cost of development decreased to 250-300

EUR/day

System was added to the portfolio on one of

the two main IT suppliers of the client

Solution


Case 3Maintenance Services - Problem

Problem

Machines on the shop-floor were undergoing

„small” amendments across the years

Most modifications were made by external

specialist service firms

Little documentation was existing

Production department was relying on multiple

small service suppliers that could charge any

fee they request


Case 3Maintenance Services - Solution

Solution

General maintenance provider was selected

The first step was to make reverse

documentation of each machine [huge work…]

Standardized hourly rates for maintenance

services were agreed

Keeping documentation updated was part of

SLA

The provider became a strategic partner of

production and maintenance departments


Risks

Management Supply PlannerShop Floor

Procurement Personnel

Activity Frequency Days-months Hours-days

Big Data Benefits

- Trend Detection- Predictive Analytics- Business Planning- Tracking activities to plan

- Exception Detection- Notification & Resolution- Shop Floor Control- Supplier collaboration

Time

Tactical / Operational Risk

Tactical Operational

Spe

nd

Operational

Tactical

Strategic – RFX/Auctions– Catalogues– Defined

category management

– RFQs– No category

management

– Spot Buy– Not sourced


Example - IBM

Strategic

Tactical

Operational

Strategic Sourcing

Global Sourcing

Aggregate Sourcing

Supplier Relations Management

Value Engineering Tax Chain

Skill Upgrading

Outsourcing e-Procurement

IBM’s approach to contain risks in supply encompassed

strategic, tactical and operational initiatives as presented in the pyramid


Risks

Local Supplier Market

Demand driven international sourcing

International procurement as a part of strategic sourcing

Strategic Global Sourcing

Leve

l of

Enga

gem

ent

in G

lob

al

Stra

tegy

Time1900 2010

Sources: 1): Monczka & Trent (1991)

Political / Geographic Risk


Example – Apple Supplier Base

Sources: 1) Apple


Potential benefits vs Sourcing Risk

Vietnam

Ukraine

Russia

Romania

PolandBrazil

Turkey

Slovenia

Italy

Czech Rep.

India

ThailandChina

Taiwan

Korea

Portugal

USA

Germany Japan

Big Small

Sma

llB

igP

ote

nti

al A

dva

nta

ge

Sourcing Risk

Risks

- Economic: Currency fluctuation, fuel crisis

- Social: Language barrier, corruption, crime

- Political: Instable government, war, terrorism

- Ecological: Natural disasters

- Supplier performance: Poor or decreased quality, long-time for delivery, cost increase

- Others: Example protection of intellectual property


Global Risks Landscape

Sources: 1) World Economic Forum Global Risks (2015)

Weighted Average Score (where 7 = maximum)


Example – Sony


Contact Data

Mateusz Borowiecki

CEO / Founder

Tel: +48 604 174 874

OptiBuy Sp. z o.o.

ul. Jana Kazimierza 301-248 Warszawa, Polska

[email protected]

Documents

Mitigation of Supply Risk Using Big Data Analysis