Franziska Nothofer: Hello everyone and welcome to today’s live webinar “Supplier Financial Risk, how Smart Risk Management Fuels Growth, and CFO Success” brought to you by Everstream Analytics in partnership with Rapid ratings. My name is Franziska, I’ll be your host today, and with me is a great lineup of leaders who’ve been shaping the way companies think about financial and supplier risk for many years.
First up, we have David Shillingford. Co-founder of Everstream Analytics, David has spent decades at the forefront of supply chain risk management, driving innovation, shaping ventures, and helping organizations turn data into actionable resilience strategies. Next up, we have James Gallard. He’s the executive chair at Rapid Ratings and an internationally recognized expert in the area of corporate and supplier financial risks with over 30 years of experience in corporate governance, capital markets, and investment banking.
And last but not least, we have Vin Mundo Senior Solutions Consultant here at Everstream with over 15 years of experience in supply chain management software. Vince, helping companies improve supply chain visibility and resilience using analytics to anticipate risks and prevent disruptions. So before we dive right in, just a few housekeeping notes.
All attendee lines are in listen only mode at the moment, but we love to hear from you. So if you have any questions throughout the session, just pop them in the q and a box at the top and we’ll get to them during the q and a part at the end of the session. You’ll also receive the full recording in your inbox within 24 hours.
And with that, let’s get started and I’ll hand it right over to you, David.
David Shillingford: All right, great. Thank you very much Franzi, uh, welcome everyone to the webinar. We got a script, but you know what happens with scripts? We’ll be going off that you heard there in the intro that, uh, James has 30 odd years in and around supply financial risks.
So I feel like I, I may be a bit like the late great Charlie Munger. Saying, yeah, I have, I have nothing more to add to that on more than one occasion. Um, but of the things that I’m gonna try and do from my standpoint and from the Everstream standpoint is to create a wrapper around the commentary on supply financial risk.
Because it’s so important to the what, why, and how to understand how. The supply financial risk fits into the broader context of supply chain risk management and a number of the broader themes around supply risk management that are quite often misunderstood. Apply absolutely to how you think about supply of financial health and how that matters within a broader, and not just supply chain risk management, but supply chain management ecosystem to get the maximum value out of the sort of things that we’re gonna be.
Talking about today. An example of that is where people think about. Supply chain risk along two dimensions. One being likelihood, the other one being severity. And there are other dimensions of risk that are critical to understand because that’s how you can understand where is my competitive advantage.
For example, can I see this risk coming is an important question. Is there something that I can do about it? Is an important question. Because if you can see it coming and you can do something about it and you do. Your compactor doesn’t, you’re going to be getting a competitive advantage. So we’re going to be drilling down on some of those themes that connect into and out of supply, supply, financial health.
But let’s start with, let’s level set and James, just help us out. How would you define supplier financial health and what is it?
James Gellert: Thanks David, and, uh, first of all, great to be with you. Everstream and Rapid ratings have a great partnership, but you and I have known each other, uh, also for, uh, for a number of years now.
Despite, uh, highlighting my 30 years of any experience, we, uh, we try to de-emphasize the whole age thing here, but I but, but I will say that, uh, for everyone that, David, I consider to be a great thought leader in this space. Uh, he’s, producing wonderful content and commentary all the time.
And, uh, it’s a pr, it’s a privilege and a pleasure as always to be able to talk to you. One of the nice things about this webinar is that, uh, David and I get together and have conversations and they can ramble in all kinds of, uh, different places. In theory, we’re going to, uh, we’re going to be more focused today.
But, uh, but hope, hopefully we have a good conversation and we certainly invite people to ask questions along the way. We will try to field them as we go if we can or get to them towards the end. You know, David, to your specific question you know, we see supplier financial health being.
Something that is, uh, is critical to understand for the value of being able to make decisions about how to work with companies in in both short and longer term perspectives that’s different than a traditional. Credit analysis that one might do on a company that will tend to have a very specific and defined period associated with it.
Oftentimes a short term one, sometimes a longer term one, but more often defined. Whereas for a lot of supply chain decisions, there’s a need to decide whether to work with a company now for their ability to deliver something on a current specification, but it’s also what’s the longer lifetime?
Opportunity to work with a company and is there a commitment to make to a supplier that is going to be long-term strong and add to the resilience of the overall supply chain by their own strength and their ability to grow with you, not to be a DA drag if there is a problem inside of that company.
And this is different than the way a lot of people historically thought about evaluating financial risk. Among suppliers, which was very payment oriented, payment score oriented. Uh, in other words, did a, has a supplier been paying their bills on time? And is that the, uh, is that really a good enough measure of what their current end, future ability is to be a strong supplier?
Our score, the financial health rating. Uh, has a bunch of different components to it, but it’s really getting to these elements of what are the core strengths of a company over a longer period of time? How efficiently is it run? What kinds of cost, structure, and working capital efficiencies does the company have?
Does it generate. Revenue and profitability off of its asset size in an efficient way relative to its global peers. What are the short term resilience and liquidity characteristics? Is it, uh, and, and these are all important because you can have a company that is. Stronger in the longer term, but has short term weaknesses.
And that may be an instructive thing to know when deciding how to work with that company. You can have companies that are weak long term, but pretty strong short term, so they’re more transactional. So all of these kind of get baked into what we see as being more sophisticated supply chain risk programs today.
You know, we, you brought up the sort of the two dimensional aspect of of supply chain risk and financial risk. And I’m curious you know, what, how you’re seeing these differences and how does financial health play into that from your perspective?
David Shillingford: Yeah, I think as you know, as you were going through the description there of.
How rapid ratings thinks about supply financial health in a much more sort of broader context than the traditional? Here’s a snapshot point in time risk score. I think if you go, if you go back to what I was saying about the importance of thinking of supply chain risk beyond likelihood and severity, you start thinking about can I see it coming?
How impactful is this going to be? Is this something that I can control? And if you sort of, if you map financial health and the way that you described it, particularly to those different check, those different items it checks all of them. because there’s a lot of risks in supply chain that you really can’t see them coming.
You really can’t control them. And they, they may or may not be impactful, but there’s no doubt that a supply bankruptcy is gonna be impactful. That that’s, that’s technically sure you can restructure, but in many cases that’s an unrecoverable disruption. It is certainly with the methodology that you talked about.
It is something that you can not only measure, but you can actually measure over time and you can see how things are trending better or trending worse. It’s certainly something that, and we’ll come back to this, I’m sure a company can control. It’s unusual that a company can control anything that would be seen as an external risk.
So if you put all of those things together, the difference between a company that has their arms around this and a doing it in the way that you describe and a company that isn’t, is very significant, particularly in the kind of volatile environment that we’re talking about today. So I think that’s, when I think about the competitive advantage that companies get from doing this well number one doing it, but number one doing it well in the way that you described versus those that aren’t.
It’s enormous. It’s as, it’s as big as almost any type of supply chain risk that I can think about. The ability for a company to really profit from this and to make this a competitive advantage. I think so much of that is about. The ability to see things coming and plan for them and shape the outcome.
So maybe it you touched on this a bit as you were going through the, here’s how we do it. Can you maybe talk a bit more about the difference between sort of historical data and the ability to predict what is coming? Because that, that seems to be a really important theme in terms of risk in general, but particularly financial risk.
James Gellert: Yeah, sure. And you know, I, um, the words that come to mind as I hear you speak are proactive and reactive. And, a lot of programs have. And some continue to be quite reactive. And if you’re reacting when, uh, a supplier files for bankruptcy, it’s way too late. Uh, you may be able to solve some of the problems that come from that or work around them, but you’re going to be impacted.
So the name of the game is being proactive and certainly, all of the the companies that we see that have been evolving their risk management processes within supply chain and elsewhere. Around the enterprise, um, have been moving towards more proactive tools data, business processes and so forth.
So in, in our domain financial it’s an interesting one because historically. Again, the way people have looked at financial risk has been very backward looking. Payment data says whether a company paid their bills faster or slower over the last whatever period of time. And that is, that is historical.
What we’ve done and what we firmly believe in is that if you have enough data and it’s the right data that you can model forward from data that is. A point in time and financial statements themselves are a very complete picture of how a company looks at a point in time. But that point in time doesn’t change overnight.
Companies evolve. And when you have enough financial statements and we use 9 million financial statements from companies over a 30 year period of time to calibrate all of our algorithms. When you’ve got that, you can take a set of financial statements and you can see what is likely to happen with a company based on how companies that look similar in similar industries by industry have progressed from a point in time onward.
I use the, the metaphor of human health because it’s, we all understand it well, and particularly coming out of the COVID crisis and using the COVID crisis as the example when COVID hit, it impacted people who had preexisting conditions. The most people who didn’t know that they had a preexisting condition were.
Shocked the most, and unfortunately it was fatal for so many. If you had diabetes, if you had pulmonary issues, you had cardiac issues, it put you in a much higher risk position. When you went to the doctor and you had everything looked at, you would in theory know. That you had those conditions and you’d be able to act accordingly, and you’d be able to take safeguards accordingly.
And if someone was going to interact with you, they would know and be able to act accordingly. That’s being proactive with personal health. If you don’t know. You can’t manage risks. You, you are unaware of. Corporate health is very much the same, that a stronger financial, a company in stronger financial health is better protected from exogenous shocks or even internal shocks, whereas a company that’s weakening is more susceptible to it.
And that’s about how the, that company or that person is going to act and survive and react to things going forward, not what they did in the past. And again, with enough data, you can model that, which we have, and that’s why we firmly recommend. The use of financial health as a means to understand how a supplier and groups of suppliers and entire portfolios of suppliers are going to be able to act in certain circumstances and how well positioned they are to be a resilient component of a supply chain.
We, we just had a question come in, and it’s one that I, we can address now because, um, I know it’s on people’s minds and that’s really about what we’re talking about how it pertains to macroeconomic issues. And the issues specifically that just popped up was about tariffs. Uh, you’ve been writing about tariffs and I’d love to hear what, uh, what your thoughts are on how.
Macroeconomic and the and particularly some of these the, these big question marks and the, and the variables that everyone are dealing with at the moment, uh, regarding tariffs, how that plays in. And then I know that we’ve got some data that we’ll share into that same conversation.
David Shillingford: Yeah, I think I mean there are two big questions with tariffs. One is what are they going to be? And I think people have given up trying to play that game. The other is who’s going to pay for them? And that’s super interesting because. It, the, what the data is now coming through that helps us to answer that question.
But it’s, as you were saying with supply financial health is dangerous to sort of just take a snapshot in time and assume that that is going to be the case in, in a month or two months time. And one of the, one of the important things to pull out of that data is. Is the importer paying for the tariff or, or are they trying to push that back on their supplier?
Or are they passing it on to the consumer? And the first thing I’d say is, it depends. It depends on the type and the size of the company. It depends on the level of. Of leverage that companies have with their suppliers. It depends on how much a company cares about their market share, if they believe that’s retrievable or irretrievable, but by and large, the importers, particularly the larger companies, have been absorbing as much of that as they can.
But that’s a, it’s a, it’s a, it’s a temporary technique and. I think we’ll, we’ll get more into the, the buyer supplier relationship and how intertwined that is with supply of financial health. It comes back to this idea of you’re actually, it’s a risk you can control. You can make it better, you can make it worse.
Uh, but what was super interesting about the data that we were looking at is which industries you could see from the data. Were pushing those costs back onto their suppliers. And largely it was, it was industries that could, it was industries that weren’t reliant on a single supplier for a very specific type of input where they have no other choice.
It was industries where they have choice to a greater or lesser extent. And that’s, uh, that, that’s certainly something that we will, we’ll be tracking very carefully as we go forward. But I, I mean, I know that. There are a lot of different financial, economic, macroeconomic data points that, that you guys are, are following at, at rapid ratings because it’s an important input in terms of what do we, what’s happened and what do we see happening.
So I’d be curious to, you know, to learn a bit more about what, what are the, what are those, or what are some of those and, and what are you seeing? And so what,
James Gellert: yeah, sure. And, uh. Look, I, I think we could, we could spend a long time talking about the tariff issue and and you know, there’s a lot there that remains to be remains to be seen.
Critical things I’d share on that before getting into some of the financial indicators is that if we, if you watch in the news today, you only see a. Small piece of the story. And there’s a lot, there’s a lot of talk right now because we’re just really coming out of one of our earning seasons that that, tariff impact seems to have been more minimal than people were expecting, but in fact, it’s really going to take another quarter to two to three quarters.
Or more before we really see what the tariff impact is. In some cases, tariffs have been the, the tariff deadlines have been kicked further down the road. In some cases they’re still bouncing around and may be quite different, but the extent to which it is coming down and impacting yet. The public companies that are reporting that people are able to see the most it’s going to take more time.
So, no, no one can sort of wave the victory flag at this point. And there’s still an awful lot of uncertainty that, uh, that’s coming into play. I, I would, we’d be remiss in a webinar to, uh, to not have a handful of slides. So I do want to show a few things and VIN, there we go. That’s great.
Uh, uh, I want to talk about a, a few things here and David jump in while I’m doing it. Please. Bankruptcies are. One of the measurable items that people can pay attention to. And it’s important too because, uh, the bankruptcy filings are certainly an indicator of what’s happening from a broad economic standpoint.
In 2025, we’ve seen a continuation of the trend of 24, which is an increase in corporate bankruptcies, both in chapter 11 reorganizations and in and in chapter seven liquidations. But we’re, we’re continuing to see what we saw last year, which is about a 10 to one ratio of private companies to public companies filing for bankruptcy.
And, in addition to this, which is probably even more alarming than the fact that we’re on an increasing trend, and we’re now right around the 2010 mark, which means we’re at a 14 year high in bankruptcies, is that corporate restructurings are running at about a two to one ratio to bankruptcies. And what that means is that.
More companies and their creditors are getting aggressive or proactive or both in for stalling a bankruptcy by getting ahead of it and restructuring a capital structure of a company. And that could mean taking over a company. It could mean amending the terms of credit agreements. There are a lot of ways that this can happen, but it doesn’t happen if companies are doing well.
So, a normal year would be about a one-to-one ratio. Now it’s a two to one ratio. That’s alarming. And uh, what we, you know, what everyone should keep in mind, particularly in supply chain is as we touched on before, it’s not about whether there’s a bankruptcy, it’s about what’s happening to a company that may be on its way to a bankruptcy.
Is a moment in time for some companies, but many companies have many moments in time where they are under pressure and decreasing in financial health, and hopefully they never file for bankruptcy. But the problems that can emerge from those companies, uh, to their customers downstream, can be manyfold.
And that is really the, the big issue.
David Shillingford: So, Vin, if you don’t mind moving forward. Oh, good. Uh, James, before you go to the next one, I’ll, I’ll just jump in with a quick point about bankruptcy data because it’s there’s, we, we, we always want to be predictive and proactive as much as we possibly can, and we, we’ve talked, we’ve talked a bit about that and bankruptcy.
The, what you can do with your supplier may be quite limited if they have just declared bankruptcy. However, there are things that you can do and there are more things you can do if you are essentially at the front of the line. So, one of the things for companies to be thoughtful about is what can I do to know about a supplier bankruptcy before their other clients know about it?
And so, although it’s a small part of what we’re talking about today. Both rapid ratings and, and Everstream and through integration go very deep into finding all of these different, hard to find and arcane sources of bankruptcy filings that are different in different countries and even different regions within countries.
So having an a day or a week or two weeks jump on your competition knowing that a, a bankruptcy has happened. So I say it’s a, it’s a small part of this. But it, it’s an important part of the data puzzle.
James Gellert: Well, and, and it’s that, it’s that ear, it’s the early warnings that are really key, that there was a bankruptcy filing that was announced this morning that, uh, that I happened to just see for a company called Motive Care.
And it’s a supplier into the financial, uh, into the health services industry. And, you know, it was rated high risk by us. I, I ran to look at what the, what our ratings were. But most importantly it dropped into the high risk area at the end of 2021. And there are all kinds of reasons for it, trying to restructure debt.
Finally restructuring debt but not being able to, not enough. Um, turning it, going from being profitable to unprofitable slightly, but then significantly, and then in increasing, uh, amounts each of the last couple of years. And that’s a path that we see with a lot of companies that fail. But with three to four years of early warning, to be able to work around and interact with that company to understand that it might be at risk is really what we’re talking about here.
It’s giving that early warning, uh, it just happens that, that example popped up this morning. I’m not going to spend a long time on, on, uh, this slide, but, uh, I wanted to just point out this is this is interest rates today and there’s a lot of talk about pressure on the Fed to reduce interest rates. We will see.
Probably something happened before the end of the year, but even a 25 or a 50 basis point decrease in, uh, the Fed funds rate is still going to mean that rates are relatively high If you look back over the last 25 years, and most private companies, which of course are most of the companies, uh, in people’s supply chains because about 75% of.
Supply chains are represented by private companies. Most of them fund on floating rate basis, so any of their borrowings are going to go up or down based on where interest, where underlying interest rates are. They, they don’t fix in their, their debt obligation interest for, 10, 15, 20 years like a public company would.
So this is a really important. Rates are high. Costs of running a business that is leveraged are high and they’re going to stay relatively high for the moment. So, Ben, if you don’t mind, going forward, we wanted to show you some. Pretty alarming, but very informative data on private companies, particularly middle market companies today, which again is a big percentage of most people’s supply chains.
This is US companies, US data. If you look at the period at the very beginning of COVID to now, and we’ve used that timeframe for a variety of reasons, but if you look at that period. Profitability, operating profitability, EBITDA for private companies, uh, and this is thousands of private companies have deteriorated by almost 25%, whereas public companies, the ones that are more visible, that people are talking about in the news more, that’s up net profit.
After tax and of course interest expense and so forth is down 226% compared to Publix up 23. The amount of debt that they’ve got, the leverage that they’ve got is up 125%. And interest coverage is. Down almost 70% and about a quarter of that is under one times interest coverage. So the, the net of all of this is that private companies have been under more strain and more pressure from a top line perspective, from a profitability perspective.
They’ve had to borrow more. To pay for the working capital they’ve needed in the business. And now a quarter of private companies in the US are unable to pay an entire year’s worth of interest expense. Now this is alarming and it is under the radar if you’re just paying attention to the sort of public market discussion about how things are going.
From a supply chain perspective, this is the kind of stuff that people need to really understand about their suppliers, which is why you have to understand their financial health because these are the things you can see when looking at their financial health. One. One key metric before moving on is that cash conversion cycles, which of course are really important.
For any company have been also gapping out by, in some industries as much as a month in, uh, in on average about two weeks for private companies in the US but flat for Publix. And what that means is they’re being paid later. They may have to be paying earlier to their own suppliers and they’re being forced to hold more inventory.
So that combination of factors is, uh, is really affecting a lot of these companies. Financial health, a lot. VIN, you can, uh, you can move this on. The, you know, David, what I, what I would ask you is now that I’ve been a complete downer and, uh, and thrown, thrown a lot of depressing stuff out, maybe you can talk a little bit more about the kind of the so what and what next as you see it and as Everstream season.
David Shillingford: Yeah. And again, this is a it’s a broader theme in supply chain risk management, even supply chain management, and that’s supplier engagement. There’s the data side of this. And gathering the sort of data that you’ve been describing and that is necessary requires a certain level of supplier engagement.
But the relationship that you have with your supplier, the level of engagement that you have with your supplier across all types of supplier engagement, not just the financial risk side of it, has an enormous impact. On how a company can both understand the risk that their supplier has around financial risk, but also what can be done about it.
And you pointed there, James, to cash conversion cycles, net payments there’s a lot of levers. There’s a lot of operational metrics that are very important in terms of cash conversion. And then of course, you got to think about payment terms. And the temptation at the moment is to be thinking about leaning on suppliers to conserve cash.
But in fact, what you might be doing there is creating a situation where your supplier either goes bankrupt or at least goes towards a position where they’re operational. Are being significantly reduced and depending on the type of supplier it is, that could be worse for your business than any type of.
Cash conservation. So thinking about having that dialogue with the supplier. Number one is the understanding, the deep understanding. Number two is having the right relationship so that you can have that discussion and then being able to actually do something about it and either help your supplier do something themselves or help them by doing something yourself.
And that, again, it comes back to not just the competitive advantage of getting that right, but it, it requires. Not just a traditional sort of single point of contact, single flow with the supplier. It requires collaboration across more than one function. And the good news is supply chain has a seat at the table, as we like to say, and the ability for procurement and supply chain to be having a discussion with the CFO.
It exists now in a way that it didn’t before. Because people understand the strategic importance of, of supply chains. But maybe you can talk a little bit about that, James, in terms of what, what do you see historically and more recently in terms of the interaction between procurement and finance? You know what’s best practice and are many people doing that?
James Gellert: Uh, that’s probably the part of supply chain risk that I would say is evolving the most right now. The more advanced companies, the ones that are really taking advantage of all of the supply chain risk work that they’ve been doing, are integrating that into the conversation at the finance level of companies.
Now, obviously in some companies, the. Procurement organization reports into finance or into the CFO, and in some cases it reports elsewhere, but the tighter linkage there is incredibly important for the business opportunity advantage That comes from understanding your supply chain better and for managing suppliers more.
Intimately and collaboratively. And you used the word collaboration, which I think is extremely important here. When one the clients we see that are understanding their suppliers the best, that are collaborating with them, that are using financial health as a language to speak to the supplier to understand them better, are in a position to do more that helps the supplier, but also helps their own organization.
CFOs. Can manage working capital better for an organization, which of course has a big EPS impact and overall working capital efficiency impact. But when looking at groups of suppliers and understanding better, who is able to deliver. On, uh, on all of the specifications and all the all of the business requirements on them as a, as an important supplier, but also to be able to do it in a way that is efficient from a cash perspective.
That’s really, really important. So understanding which of hundreds or thousands of suppliers you may be paying too fast. Relative to what they, to their average and where you might be able to get an advantage by paying them by 15 or 30 or even 45 days later. You don’t want to do that to a supplier where you’re going to hurt them.
You want to be able to do it to a supplier that perhaps is very happy to have that happen. If. Particularly there’s some business advantage to that they’re getting more business or it allows you to determine which suppliers to pull into and invite into a supply chain finance program. There are a lot of mechanisms that can be used and levers that can be pulled to use supply chain and finance supplier financial health data in your supply chain risk program and integrate it into better working capital efficiency and better financial management of a company.
When we see that happening, we know that companies are reaching a real sophistication level in, uh, in their programs. So I turn it back to you and ask, how are you seeing this play into the sort of the broader context of supply chain risk across other domains as well?
David Shillingford: Yeah, I think the sophistication you talk about sort of C-P-O-C-F-O level.
The equivalent that we see there at Everstream is where there is there. There’s a holistic approach across all risks and all supply chain functions, and that really changes so much about what a company can do by having that view and to make that view actionable. Obviously the rapid ratings integration into, into Ever Stream’s platform is is a very good example of that.
I would, uh, I would love to describe it to everyone, but seeing as a picture’s worth a thousand words. We don’t have time for a thousand words. I’m going to flip it to Vin. If you could do a quick demo, then just, I think, you know, absolute, that’s the best way of describing what we’re talking about here.
Vin Ramundo: Yeah, I think what’s important to understand, I mean I’m going to show a financial health risk, but I think this is important, where we are integrating this data from rapid ratings and our overall supply chain risk is the ability to kind of further understand the context of what’s happening at that supplier, uh, based upon real time events.
Like we’re monitoring, like this example here where there’s a supplier planning on cutting 23 jobs in Texas facilities. So the customer will get an email, they can quickly click on this and drill into a link. Into the application where they can see further information. Uh, so they can see here that, uh, this facility, this natural ship company is planning on cutting 23 jobs at the Texas facility.
So again, that could be an important thing. Or maybe they’re just, you know, optimizing some of their business processes where we can then drill into the supplier and see, um, additional information around that supplier. So here’s where we’ve integrated the rapid ratings. FR score into our platform.
So now not only are we looking at that real-time incident based risk, we have the ability to pull in data from rapid ratings. It’s incorporated into our risk model. This can be as a standard single score, or can be incorporated into an overall supply chain risk model. For this example, I’m just kind of focusing on the FFHR score here.
If we drill into the details here. You can actually see all the information. Uh, so you don’t have to go to rapid ratings to get that, to see the score, the simulated h data. So now you can make a better understanding of what’s going on with the supplier so that you can take the context of what’s happening today, incorporate the overall financial risk so you can get a better holistic picture of what’s going on to see is this a problem?
Is that layoff something that’s good or is this assigned to. A demise of a company, and you can actually even go in and drill into the reports to pull in the actual report here, and you can actually see additional detailed information from rapid ratings. So ultimately holistic approach of supply chain risk.
But now we can get further analysis and detail on that financial side from our partner, rapid rating. So now you have a much better picture of the entire process. I’ll go back to you guys. Yeah, no, that’s great.
David Shillingford: Thanks, Finn. Yeah, that, that, that really, uh, it, it sums it up and it, you know, if it isn’t, if it isn’t obvious that a company, if you’re looking at supplier risk or any type of.
Supply chain risk to be thinking about a, a single supplier and, and not your whole network is missing the point. And the same thing is true with risk. If, if you’re looking just at financial risk or if you’re looking just at sort of external physical risk and not the other, then it could look great.
But in fact there’s something that you’re not looking at that’s out of your field of view that is going to become a huge problem. So there’s having a single pane of glass where you can see your entire supply chain and every risk that there’s no other way to do this effectively.
Vin Ramundo: Which is what James was saying before, David, like the fact that we are able to now have the help that you almost have like your checklist now. So when you see the context of a supply chain risk, you know someone that has a preexisting condition. So we have this layoff that’s a problem. Now, if they were financially stable, we’re saying, oh, they’re probably doing something good.
Just they’re trimming the fat. You see a company that has a bad risk. Now we know that the context of that supply chain risk or that financial risk is much greater because they’re not in good shape. And that’s really where combining this information together, I showed a financial side. But this could have been a risk on a flood, it could have been a risk on anything.
And the fact that that company is not, that’s not financially stable, it’s going to affect them much worse than someone who can. And
James Gellert: a lot of that comes down, how the data and how the insights are used, right? It’s not about seeing it, checking a box saying, we’ve done this. It’s about engaging with the supplier.
And of course, the most critical suppliers you’re engaging with on a regular basis, the more you have an automated process for the insights, the more suppliers in an efficient way you can communicate with and collaborate with and ultimately understanding. Talking to a supplier, particularly a critical one about what’s going on with them puts you in a position to, in some cases help them if they’re struggling, but also just to have the context for what’s going on with them around which you can make better decisions.
Vin Ramundo: Yeah, and we can also analyze that information. I just showed a use case on an issue, but what a lot of our customers do is they, they map the material flow information in the system, and then they actually analyze that financial risk. And then look across product lines, look across their end, end supply chain and say, where do I have the biggest potential risk?
And do I need to find alternate suppliers? Is this a critical or single source supplier? So all those factors really come into play when you’re looking holistically at your business and your supply chain. How we incorporate it. And James, I think one of the other things you were talking about before is, you know, people could think, oh, we could just go get this information from anywhere.
If the biggest issue right now is in the private companies, you really need companies like yourself to get that information from those private companies. Because that’s where a lot of the issues are happening today.
James Gellert: Vin, you, uh, you, you somehow, uh, anticipated, uh, or, or were just lucky. A question just came in about private company data, how we source it.
So let me just address that now, David, if that’s all right. Please. Um, so this is a critical issue and again, 75% of people supply chains are private. Uh, that data is not available out there. So we have a process that is a tech enabled. Process for reaching out to private companies to get them to disclose financials for us to put through the system and provide the ratings to our clients.
And we’ve now done that. We’ve produced about a half a million private company ratings from 170 countries. So we have a, uh, a large. A group of companies that are very familiar with us that we have been doing this with and, uh, and in fact we’re actually now allowing private companies to come in and, and, uh, and opt into being a member of this process as well as our going out and reaching out to them on behalf of our clients.
But, but we’ve been doing this in scale now for quite some time and it’s, you know, it, it, it’s a process and, and it, it is very much about. Espousing the benefits of the transparency and the collaboration to get that, uh, to get that transparency and that disclosure. But it works really well. So I’m going to, uh, just because we’re coming close on time, uh, David, I’m going to ask you taking all of these things that we’ve been, uh, we’ve been talking about, what are your two or three most important takeaways slash insights that you would give people?
David Shillingford: Yeah, I think I think I’d, I’d choose two. One is the importance of looking at supply chain risk holistically, and that is two things. One is it’s across all risks. That’s why it’s important for Everstream to identify the risks that Everstream is the industry leader at assessing and monitoring. And then to find other risks like financial risk, where clearly rapid ratings are the experts, are the leaders, and to integrate that data.
The second thing is really this idea of supplier engagement is. To understand the data, to have context around the data, and then to be able to take action with a level of collaboration and a level of, you know, back to what you’re saying about the, the, the human health analogy, you’re always going to, people have to triage when, when they’re in er, and it’s the same with suppliers.
So to be, to have a sophisticated supplier engagement program. It is critical o otherwise it’s just data. So I think those are my two things. One is holistic and the other one is supplier engagement. What would be top of your list, James, as takeaways?
James Gellert: Well, the, the collaboration is absolutely right up there for me as well.
The other is for people to recognize that with the data that I showed, that we are in a period where there’s a lot of strain, tariffs, just throw on top of that additional strain, uh, for companies, particularly privates. So, one needs to really understand the financial health of their private companies and Publix, but privates because it’s harder and, um.
And then to keep in mind that a company’s financial health is not just about being bankrupt or not, it’s about their ability to invest in, fund, maintain, and do all of the things that you need them to do all the time. That’s other risk areas likes, and making sure that they’re on top of that ESG initiatives, but it’s also r and d and product development and delivery and timing and all of those things together are extremely important.
David Shillingford: Fantastic.
Franziska Nothofer: Wonderful. Thank you all so much. We are almost at time now. We had a few more questions coming in, but we’ll reach out to you directly on those and get back to you one-on-one. Thank you so much to our speakers today, and thanks to Rapid ratings for the great partnership, and we will send you the recording of the session within 24 hours.
And if you have any questions for our experts directly, you can always email us at [email protected] and we’ll get back to you. And thank you so much. Have a great day or evening everyone, depending on where you’re joining us from. And speak soon. Thank you. Thanks
David Shillingford: everyone. Have a good one. Thank you very much.
Bye.