Franziska Nothofer:
Good morning, good evening. Thank you for joining us today for the live webinar is part of our supply chain optimization webinar series this Autumn. Today’s session is all about scenario planning and we’ll do a deep dive into how to prepare for an upcoming risk. My name is FCA and I’m very excited to introduce today’s expert speaker, Greg Leary. He’s a senior solutions consultant based in Boston and has years of expertise in the supply chain risk management space, and he’ll be guiding us for the session today and show the learnings in the Everstream Analytics platform in action afterwards. Now, a few housekeeping notes before we start. All your attendee lines are currently in listen only, listen only mode on mute, but you can pop your question into the q and a box at the top of the GoToWebinar panel at any time and we’ll get to as many as we can towards the end of the session. The webinar is also recorded and we’ll share out a recording via email within 24 hours after the session. And with that, I’ll hand it right over to you, Greg. Thank you.
Greg Leary:
Thank you, Franziska. Alright, so good morning everyone. My name’s Greg Leary, I’m a solutions consultant with Everstream. Very happy to be here with you today to talk about scenario planning and why that is an important part of any comprehensive risk management program. And I think the reason is fairly evident. We know that COVID was not just a blip on the radar now, never to be seen again. I think it was more of an awakening and that supply chain disruptions are continuing to happen, even accelerating in some cases. You get crazy weather, you get sanctions, geo sociopolitical tensions, labor actions, armed conflicts with potential of conflict just to name a few. And any one disruption can potentially cost you millions of dollars, not to mention the damage to your brand and reputation, which is invaluable. So if you’re not planning for risk, then you’re really just stuck reacting to it.
So in the ideal scenario, you could strategically design your supply chain ahead of time to avoid the risk altogether. That’s the best case. Avoid suppliers in risky areas, suppliers who have a history of poor performance, make sure you’re multi-source on key components and so on. And we have tools that can help there, which we’ve covered in previous webinars. So if you’re interested in those, you can go view them on demand. Next best, if you can’t avoid the risk is that you may be alerted to it in advance so that you have time to plan and to take action. Think about things like weather events or strikes and protests, sanctions and those types of events that we may be able to alert you days or even weeks in advance ahead of time so that you have time to plan. And there’s also situations where there’s often leading indicators before.
Say a supplier suffers a financial insolvencies, there may announce layoffs or reorgs, there may be some m and a activity, all things that lead to potential financial distress where we can help alert you to those as well. But on the other hand, there are things that are just going to happen when they happen. You can’t predict them, you can only be prepared to respond to them. And that’s really where our topic today comes into play scenario planning. So if you can’t avoid the risk, then the next best is to be able to respond to it in the most timely and effective manner possible to ensure business continuity. Because when you’re dealing with risk, time is very much of the essence. There is often a first mover advantage. You want to secure that scarce supply or capacity. You want to make sure that you get those cheaper logistics alternatives whenever possible.
So this is something that we at everstream are really good at and where scenario planning helps. So you can simulate and prepare for upcoming events that you’re alerted to in advance as well as you can gain plan for situations that may occur in the future even though you’re not exactly sure when they might occur. But that way you’re going to be prepared if and when they happen with the proper mitigation strategies ready to put into action. So with that, let me exit out of here and we’ll switch over to a live demonstration. So one of ever stream’s core capabilities is that we are able to map your supply chain network, monitor it for risk, and then alert you as far in advance as possible to that risk. So that’s really what you’re seeing on the map here. We also use that capability for scenario planning for various supply chain events in advance so that you can see the impact they have on you and then create mitigation plans to resolve them should they occur in the future.
But the key here is to be prepared and know what to expect ahead of time and not trying to figure it out on the fly. So to run through some scenarios, we open up our scenario builder tool here and let’s say that I want to create a new scenario and this scenario is going to be a tropical cyclone hitting Malaysia. Now I know a cyclone close to the equator hitting on Malaysia would be unusual, but maybe that’s a good reason why we would want to plan for it, create a scenario around it to see what kind of impact it would have on us. So give it a name, you can make this a public or a private event. You can describe the area of impact. So you can use what we call a geofence, which is just like you draw a shape or you can use a radius.
You think of like a earthquake would have an epicenter that would have a radius around it. So you have either one of those options. If we want to zoom to Malaysia here, what we’re seeing here on the location is that we know we have some sites there, we’re not sure exactly what they are, how they would be impacted, but if I want to try to do my best drawing on what a potential cyclone sphere or cone of influence would look like, we could do something like that. And then we can define some other parameters. What’s the severity? So we have four different levels of severity. It could be a mild, moderate, severe or extreme. Let’s say that it’s a more severe. And then we have risk type. So this is where you can identify what type of event disruption are you planning for here. So there’s roughly a hundred some odd different types of risks that we monitor across the spectrum.
So you can choose one here, we said it was a cyclone, so let’s pick cyclone. You can give it a date range. Let’s say that it’s anticipated to happen in the next week. Apply that and then you can give it a status active or inactive. After the date range expires, it’ll turn inactive, but it will still be in there if you want to activate it later, lemme just say this is a send you, oops, can’t take. There we go and say create it. And what it’s doing behind the scenes is it’s creating that simulation for us. You can see the information that we entered here in terms of a start date, expected end date, the text description. Now if we want to view the details or the impact of this, then we click on the view details button here. And what it tells us is that based upon that shape, that geofence that we drew, it tells us a lot of very interesting information to help us assess the impact that this could potentially have on us.
Again, this is a hypothetical situation that we’re investigating here, but it’s treated it as if it were a real incident so that we could understand the effect that it would have on us and our operations. So on the facilities tab here, facilities is just how we describe a supply chain node or location. So it could be potentially one of your manufacturing locations or warehouses. It could be one of your supplier locations where they’re making and shipping the components to. You could be ports like you see a few here or other logistics hubs that you’re using to either ship or bring your raw materials in through or ship your products out through. So it could be airports, rail hubs as well, border crossings, pretty much any type of location that we’re monitoring for you that could potentially be impacted by this disruptive event, that’s what we’re going to be included here.
So that’s on the facilities tab. So you would understand quickly which of your suppliers, which of your locations, which of your logistics hubs could be impacted. Then on the discovered facilities tab, this is taking it down a notch. So this is looking at your multi-tier supply chain or your sub-tier locations. So not just your suppliers but their suppliers and their suppliers as well. So in addition to your direct material suppliers, we can also scenario plan for sub tier suppliers. And if you don’t know those already, then we have tools that can help you determine, identify and map those sub tier suppliers as well. On the next tab here we have transportation lane. So this is another key consideration when you’re doing scenario planning because the risk may not always be at the origin or the destination. Sometimes the risk is in route, but it can delay a shipment just the same as a supplier disruption can like a cyclone.
Here is a good example for ocean transportation lanes, things like snow storms, wildfires, they might delay or alter your truck lanes, high winds, flight cancellations can delay air transportation lanes and any of these can be just as impactful as the disruption at the supplier itself in terms of delaying the shipments to you and are all things that we monitor for. You could even drill down into one of those lanes and see the area that is going to be impacted by that potential disruption here in red. So a lot of detail here. And in addition to shipments, we can also look at, excuse me, lanes, we can also look at shipments on those lanes that could be potentially impacted based upon the timing of that incident. So you might have hundreds of shipments, but only a few would potentially be impacted based upon what you define the timeframe for this.
So that’s another layer of a detail, especially useful when there’s kind of imminent events that you have a little advanced warning for like a hurricane or cyclone here, potentially strike or protest, you can understand what impact it would have on your shipments. Big area that you would want to investigate from a scenario planning perspective would be the materials that you’re procuring from those suppliers in the impacted areas. So we can look at things like, here are the suppliers, here are the materials that we’re procuring from them. These are the production, your production facilities that they are flowing into. These are the final products that their components are going into. And you can even assign a value to the products so you understand how big of a potential issue is that you’re dealing with. So these are the materials that you would need to plan for should an event like this occur, where do you keep your excess inventory or where are your alternate suppliers and things like that.
And any of the data that we’ve seen in these tables, you have the ability to export that should you want to do some offline analysis of it. But the idea here is that we want to provide as much information as possible to you in one place through one interface so that you can effectively assess and triage this incident. And then you can effectively, once you understand the impact that this kind of event would have on you, then you can work on mitigation plans to put in place should this risk actually occur. So to do that, we can go over here to the create and view plan. So within the system you have the ability to create what we call action plans. And an action plan is really just a, it’s like a mini project plan or a standard operating procedure for how you deal with risk.
And the best time to create these types of plans is before the risk actually happens. So then when they do occur or if they occur in the future, you can then quickly put them into place. So an action plan is going to have an owner, I’ll just assign it to myself, it’s going to have a status, you can assign or attach external links and documents to these plans. So we’re going to create an action plan and again, it’s just really a set of tasks, steps to follow in a situation like this, should this risk occur, what types of actions are we going to take to mitigate it? Each task you have the ability to define, name it. So I can say we’re just going to analyze the incident and then that’s our new task. You can specifically assign it to different people, you can assign it a relative due date from the time the incident occurs.
Is this going to happen? Does it need to be resolved one day, two days later? And then people who get assigned tasks will be notified of that assignment and have a link to get right to the plan. So the next step might be after we get solicit feedback from the supplier and not typing very well here, but for demo’s sake, I’m just going to speed through here. So you go through, you define your set of steps to resolve the incident and then when you’re or how you would resolve this particular type of incident. And then when you’re done, you can create a playbook out of those steps so that in the future if you run into this incident, you don’t have to start from scratch, you’ll have a predefined playbook with the steps already outlined and who needs to be involved and the timeframes those need to happen in that you can just apply to this type of incident.
So I’m not going to save this one here, but we’re going to go back and look at some other potential scenario planning activities that you might want to look at. So everything starts with a map when it comes or starts with the map when it comes to scenario planning. So another common scenario that we see companies taking a look at is what would be the impact to say of a conflict between China and Taiwan? What effect would that have on me? So we can go back to our scenario builder tool. We can say let’s create another scenario. In this case it’s going to be a China Taiwan conflict and we will go through the same steps we did before. We’re going to make this a public. We can make this one a geofence. I didn’t mean to start it out that far, but that’s fine.
We’ll tidy it up here in a second. So we’ll say just draw our shape around Taiwan there and we’ll say that this one will also be a severe incident. And for this risk type, let’s pick outbreak of war. We’ll give that a date range that’s maybe not happening next week, but let’s put it out there somewhere in the future. Make it active. Say this is a simulation, we’ll create our internal incident again and say, whoops, name already exists, so I must have already done one like that before. So we’ll just make this one a number two.
So again, it is going to create that incident for us. We can then go look at the details of it similar as we did before, so we can identify which suppliers that we’d have in Taiwan which would potentially be impacted by this. So we can see those here again, we see the different materials that we get from them, which of our production facilities they’re feeding into, which of our final products could potentially be impacted, which of the, what’s the value of those products? And here we could maybe look at one of those plans, saved plans that we had created before and apply that to this particular incident. So instead of creating them from scratch, I can just say, let’s use our standard incident response plan here and that would be how we would resolve this particular scenario. So again, you have the ability to create multiple different scenarios, see the impact in terms of which of your direct material suppliers could be impacted, sub tier suppliers, transportation lanes, shipments, and then the materials that are being impacted there.
And you can even, I’m going to exit out of here real quick. And you don’t have to create them on the fly all the time. They are saved in the system. So you might have some existing ones in here if you’re looking at a potential China Taiwan conflict, you might also want to look at Taiwanese suppliers that are located in China that could potentially be impacted as well. You might have a scenario that looks at the transportation corridor around China and Taiwan to understand which of your lanes and your shipments could be impacted by a potential conflict. So again, any type of incident that we are monitoring for already, you can use as a potential type of scenario plan. So here looking at Taiwan suppliers in China scenario, we could quickly identify some like foxcon or A-T-S-M-C that might potentially be at risk should a conflict emerge there. So with that, that is essentially all I had planned to go through for the demo, but we wanted to leave some time here at the end for questions and answers. So I’ll turn it back over to you to see if any questions have come in from the audience.
Franziska Nothofer:
Perfect, thanks Greg for guiding us through the scenario planning process in the platform, loads of great insights and best practices and we’ve had a few questions from our attendees come through. Let’s dive right in with the first one here. So the first one is, does scenario planning just apply to direct material suppliers or multi-tier suppliers too?
Greg Leary:
Yeah, so if you have your multi-tiered suppliers loaded into the platform, then yes, it’ll take into account both of them. We do run into companies that really only have a good understanding of their direct or maybe tier one suppliers. So obviously you could start with that and then add the multi-tier layer later. But we do have tools to help you figure out those multi-tier supply chains as well.
Franziska Nothofer:
Okay, perfect. Thanks Greg. And the second question directly ties into that, how do you determine the multi-tier suppliers?
Greg Leary:
Yeah, we’re a analytics company at our core. So we take a data first approach in trying to identify the sub tier suppliers. So we look at trade related data, import, export data, shipment data, location based data to try and take a data science approach to figuring out those sub tier suppliers as opposed to using surveys and questionnaires to determine that. But again, you can always start with just your direct suppliers, do your scenario planning with those, and then as you get more data you can add that into the platform.
Franziska Nothofer:
Thank you, Greg. Okay, next question. Is there a limit to how many scenarios can be created?
Greg Leary:
No, not really. I mean I know I just went through a few here, but yeah, there’s no limit. I guess just your imagination would be the limit that I would place on it, but nothing in the system that stops you from creating as many as you want.
Franziska Nothofer:
Perfect, thank you. Then another interesting one regarding the geofence you mentioned. So if we have a supplier just outside the geofence, does the platform account for indirect spillover risks?
Greg Leary:
So if I understand the question correctly, if I draw the geofence and the way I would interpret the question is am I only looking at things that are directly, you say either on or in the geofence and we do
Franziska Nothofer:
That, that’s how I put it as well.
Greg Leary:
Yeah, but there’s also kind of a buffer area, I guess you will. You could say for a flood, I want to consider things within the geofence as well as anything one mile, five miles, 10 miles outside the geofence. So you could still bring in other things that are close but maybe not directly within the geofence. So I hope that answers the question. Same works for like we did a radius. If you did an epicenter in a radius, you can determine how far it goes out.
Franziska Nothofer:
Okay, perfect. Thank you. And then we have one more on transportation routes. Do you take those into consideration too?
Greg Leary:
Yeah, we do. Now the data for that would come from you. Initially we would want to know your locations, your locations, your supplier locations. We’d also ask for what are your transportation lanes, just like an origin destination pair. If there are multi-leg routes, it might go from a supplier location to an airport, then to another airport, then to your location. So we can do those multi legs, then we’d want to know those intermediate points or we just pick our soft brick and determine the most likely routes. From a ocean lane perspective, from an air travel perspective, it’s truck route, then it’s like using Google maps, it is going to determine the best route to get from point A to point B. So the data initially on where I’m shipping from point to point would come from you. Then we would determine the lane. And then if you wanted to do shipments as well, then that would typically come from your transportation management system. So you would send us to shipments, we would be able to assess them for risk and then send them back to use. And we have standard integrations with SAP and Oracle for transportation management.
Franziska Nothofer:
Perfect. Thanks Greg. We had two more come through. Thanks for asking all the great questions. That’s perfect. Okay, so first of all, does the application portray any financials associated with scenarios?
Greg Leary:
I would say as far as financials and scenarios go, if you remember one of the screens we looked at, there’s a value and the value is it’s really a placeholder. I see a lot of companies use it from a revenue at risk. So if I have supply, so if I’m doing a scenario and I identify these suppliers at risk and I’m getting these materials from them that go into these final products that I’m selling to my customer, you can assign a value to those final products so you understand what’s potentially at risk. If I don’t have the components that go into those final products that I can’t sell to my customers, then what’s that value at risk? So that’s the type of value that we would assign to the scenario. Now as I showed quickly, I know I didn’t spend a lot of time on it, but you can export the data. Some companies don’t like to put that type of information in external systems. So you have the option to export it and do that analysis within your own tools as well.
Franziska Nothofer:
Perfect, thank you. And the last one for today, now I just need to see if I got this correctly. So the Sub tier supplier data isn’t directly linked to the materials actually supplied to the customer through tier one suppliers. How accurate and customer specific is this Sub tier data?
Greg Leary:
So the sub tier data is linked to a tier one, which is then linked to potentially your manufacturing facility. So it looks like, so we could call you, when I say I’m saying you’re a manufacturer, if you’re a tier zero, then you know who your tier ones or your direct material suppliers are. So we link the sub tiers to that tier one, both from a location perspective and a material perspective. So if a supplier is supplying into your tier one, we will identify the material that they’re supplying to them, which you can then see the flow into your end product. So it is I guess kind of indirectly linked from the sub tier up through your tier one. But we would always ask or we would always start with, and this is what most customers know is who your direct material suppliers are and what you’re procuring from them. And then we would use that to do our data analysis to determine who their likely suppliers are. So I hope that helped answer the question.
Franziska Nothofer:
That was a great answer. Thanks Greg. And yeah, that was
Greg Leary:
All on questions. Feel free to send them to us and we’ll respond to you
Franziska Nothofer:
Exactly. If anything pops up after the fact, you can always email us directly at info at everstream, do AI and we’ll get back to you one-on-one on those. So yeah, thanks so much again, Greg for the great presentation and the demo. We’re now slowly coming to the end of today’s session and wrap things up shortly. And thank you also for our attendees for joining us today, and we hope to see you soon for our remaining sessions of this very hands-on optimization series. The next one is right there on the screen on the 29th of October on how to realize the value of investing in a supply chain risk management solution. And the last one of the series on the 12th of November will be an ask me anything on supply chain risk and resilience session with all of our solutions consultants. So you can bring your most pressing questions and join us live. Okay, thank you so much. Have a great rest of your week. And with that we’ll close the session. Goodbye.
Greg Leary:
Thank you all. Thanks.