Are we practicing Intelligence for Risk Management?
Regardless of our position as a customer or a supplier, we are very well aware of the diligent steps taken in order to formalize a business relationship. Are these steps being sustained?
It starts with a non-disclosure agreement and leads up to a request for information that is often carefully put together by strategy, the technical team, IT and legal departments. The RFI requires evidence of the supplier’s legal set up, information on partners, quality, capacity, logistics, information security, financial health and so on. Filling the request out is a meticulous job on both sides and often takes days or even weeks to complete.
Once this is ticked off and satisfactory from the customer’s perspective, a request for proposal is sent out and… may the best proposal win! It is often not over then though. In large contracts, a verbal thumbs up may be communicated pending further due diligence. In many cases, after due diligence is conducted, a list of improvement actions is instructed to the supplier and a contract will only be signed once those improvements are put into place. Suppliers will often spend millions on such improvements in order to seal the deal.
Lots of open questions to consider
What happens in recessionary times, however? How can we rest assured that our partners are in conformity with the operational procedures that we have committed upon? Let’s take this one step further… what about the partners of our partners? How do we know that our partners haven’t changed their suppliers to cheaper ones that may lack the quality standards that we have come to expect? How do we know that the changes in policies (such as work from home, social distancing, etc.) are not affecting the general working practices and this may come to affect our business? How do we know that some player that is hidden somewhere along our supply chain isn’t cutting corners in staffing, raw materials, changing to cheaper partners, etc. in order to make up for decreased demand? Also, how prepared are we for when suppliers come to us trying to change terms, conditions and set new rules? These are very possible factors that often take place during recessions and can have catastrophic effects on our businesses.
In times of recessionary periods, executives are no longer discussing market expansion plans in the board room. Instead, they are discussing risk management – how to protect their business and minimize their losses. COVID-19 has elevated supply chain management to a strategic functional area rising to the Board of Director level. The rigorous application of intelligence is key to minimize liability on any supply chain management oversight. Legislation often holds Directors personally liable for any oversight and this further encourages intelligence for supply chain management to be at the very top of the agenda.
M-Brain’s role is to help you protect your business
M-Brain is helping companies mitigate risk by conducting deep dives on the several players that form their supply chain and identifying the pain points that these suppliers are going through as well as uncovering measures that are being taken to overcome such pain. Once this exercise is carried out, M-Brain is mapping out potential implications and caution measures to our customers.
As a global company with primary research and analysis experts spread across the planet, M-Brain has the resources, skills and capabilities to help you protect your business in times when your business may need protecting.