Franziska Nothofer:
Welcome to today’s live webinar session, How to Realize the Value of Investing in Supply Chain Risk Management Solutions, run by Everstream Analytics in partnership with the Supply Chain Risk Management Consortium. I’m Franziska and I’ll be your host today, and we’ll all be joined by a fantastic panel of three leaders who’ve been shaping how companies think about supply chain risk management for decades. First up, we have David Shillingford. David is the co-founder of Everstream Analytics and has spent decades at the forefront of supply chain risk management, driving innovation shaping ventures, and helping organizations turn risk data into actionable resilience strategies. Next we have Greg Schlegel, founder of the Supply Chain Risk Management Consortium, which is a network of 30 companies dedicated to helping organizations manage supply chain risk. And he has heaps of experience as a Fortune 100 supply chain exec and consultant, and has helped globally leading companies build more resilient supply chains.
And then last but not least, we have Jim de Vries Chief Strategy Officer at the Supply Chain Risk Management Consortium, working closely with Greg on a day-to-day basis. And Jim’s a recognized thought leader and leadership coach with deep expertise in supply chain risk. He’s helped leading companies get a clear view of their risk and put practical strategies in place to mitigate them and derive value, which is our topic today. So yes, we have the right experts for this important topic on the line. And the session will really be a panel conversation format focused on four key areas tying into supply chain risk management value. And now before I hand it over to David, just some quick housekeeping notes. All attendee lines are currently muted, but if you have any questions throughout the session, just pop them in the q and a box, which appears at the top of your go-to webinar panel, and then we’ll get to as many as we can throughout the q and a session at the end of the webinar. Alright, with that, let’s get started. And David, over to you. Thank you.
David Shillingford:
Alright, yeah, thanks Franzi and thank you Jim. Thank you Greg for joining us. It’s a really important topic. I think the way to frame it and our motivation for doing this is that on one hand every day there are examples, discussions about supply chain risk and supply chain disruptions and the importance of managing risk and supply chains at the company, the industry, even at the country level. But then there is a gap between that and the discussion within a company with the CFO or whoever it is that’s signing off on an investment, be that digital or physical in and around supply chain risk management. And so what we want to do today is talk, we’ll talk a little bit about the what and the how of supply chain risk management, but we really want to focus on the why. And as we do that, we want to talk about the value and different ways of thinking about the value that companies get out of supply chain risk management.
There’s no shortage of examples. We will flag up a number of them, but we want to acknowledge as well that although the buckets of value are essentially the same across all industries and companies, exactly what that looks like in an industry based on network complexity type of product, regulatory compliance, things like that. It’s going to vary a bit and that’s going to vary also within a single company. A lot of that is to do with the maturity of the company. So we will touch on that as we go through the webinar. So I think just to frame the importance of this and how we’re going to approach it and back to you, Franzi.
Franziska Nothofer:
Perfect. Thank you David. Alright, let’s start right off with our first core topic, which is visibility, majority and collaboration. And I’ve got the first question for you, Jim. What makes the difference between companies that truly get value from their supply chain risk management efforts and those that don’t? And then how does that shift as their supply chain matures?
Jim de Vries:
Great question, and thank you again for having me on today and with Greg. We really appreciate it. Supply chain maturity is one of the most important things that’s most often overlooked is most companies don’t know how mature or immature they are. If you look at Gartner’s five stage model that came out back in the 1990s, most companies are in that lower tier, either level one or two, which means they can barely see what’s going on. So visibility, as David said earlier, is the essence of everything you have to see before you can walk or know where you’re going. But after you see, you have to do more than just see where things are going. You have to act. And so as companies mature and are able to make more proactive actions as you mature from stage one, two, and three, then you’re actually able to gain the value out of the maturity. Most companies only get to stage three and then they kind of fall back to stage one, they reorganize, and that’s because the leadership doesn’t see the return. So we’ll get into it later, but I call it the one, two, three step. So most companies go to 1, 2, 3, they get to that level and then they fall back. But visibility is the key to getting you on your way. Thank you.
Greg, do you want to add some more to that?
Greg Schlegel:
Yeah, yeah, good point. And we start with visibility. We advocate that it is a pleasure to be here with all of you to talk about our passion of the last 15 years. I just want to reinforce the issue that Jim mentioned about visibility. It’s so important to us that we, the consortium, have placed visibility as a second stage of our five stage supply chain risk management maturity model. Why did we do that? Because we’ve witnessed over the last 15 years in this space, what you don’t know about your supply chain can and will hurt you with visibility through the supply base and near real, real-time external risk alerts such as what Cisco has developed provides them the ability to be proactive relative to two areas relative to their potential delays regarding delivery of their sophisticated electronic equipment and weather related risk events. So remember, in risk management, time is money and speed is life. I’ll turn it over to Dave.
David Shillingford:
I think the thing I’d add to that, Greg, is as you think about supply chain maturity, I think a mistake that I often hear is the assumption that I’ve got to get to a certain level of supply chain maturity before I can reap a return around supply chain risk management. And that’s incorrect because the levels of maturity and supply chain risk management will follow the level of maturity in supply chain management and your level of say, visibility to risk and your level of visibility to your own network is going to evolve over time. But I guarantee that what you can see today, in other words, your own network plus a bit more and the risks that you are already aware of or could easily become aware of, there is opportunity on day one within literally weeks of getting going to get a value out of supply chain risk management. So it’s not, we got to have all our supply chain management processes and platforms in place, and then we’ll get to supply chain risk management. The two should evolve in parallel.
Greg Schlegel:
Great point.
Franziska Nothofer:
Wonderful. Thank you. And yeah, that’s an important foundation because once you have that visibility in place, the next question becomes how do you actually turn that readiness into resilience when disruption hits? And that leads us to our next theme, agility and resilience. So yeah, David Agility has become a defining factor of resilience in today’s supply chains. What does agility look like in practice and how does it actually create business value when disruption hits?
David Shillingford:
Yeah, so I think agility is a really, really good and central theme to pull on here. And I’m going to start by saying that I think that one of the problems people have in terms of thinking about value and supply chain risk management is that they talk about resilience. And when they talk about resilience, the people who hear them talking about that their minds are going to redundancy, they associate redundancy with resilience and resilience with redundancy. And it’s true that redundancy is an important part of resilience, but it isn’t the complete story. And the problem with redundancy is that it is associated with cost. I need more inventory here, I need more suppliers, I need more this, more that. And there is cost associated, it’s hard costs that you’re investing ahead of an event and there is still an important return to be had from redundancy, but it’s a harder discussion to have if your cost is now and your benefit is later, we’ll get into that.
We’ll get into the analysis of that and where and why redundancy is valuable. But agility is something that requires less investment and is something that is more closely tied to many of the fundamentals of supply chain management and efficiency. Essentially it’s being able to react faster, faster than you did yesterday and ideally faster than the competition. So when you think about agility, there’s a couple of ways of doing that. The traditional way is along the lines of an analysis that we call time to recover. How quickly from knowing about the event or the event’s impact, can I get back to normal or as close to normal as is reasonably possible? And shrinking that timeline has obvious value. If my production line is down for five days instead of 10 days, you can put real numbers against that. But the other way of thinking about agility is the gap between time to recover and time to survive, time to survive being more about redundancy.
And if one meets the other, in other words, you’re not back up and running and you run out of inventory or whatever it is, then you’ve gone from costs that relate to a production stoppage to costs that relate to a loss of revenue. But the other way, and the easiest way to think about agility is speed versus competition. Because very often your recovery path, what you need to do next is to acquire capacity of some sort, whether it’s transportation or supply materials. There are going to be other people looking for that capacity. And if you can move faster than the competition to get that capacity, not only is your time to recover going to be faster, you will gain market share or you have the opportunity to gain market share. And we see plenty of examples of that and there are more examples today of that than there ever have been. So when people think about resilience, they should be thinking not just about redundancy, but they should be thinking about agility as well and the different ways in which agility can create value. And I will throw that back to the other guys. What would you add to that?
Jim de Vries:
You covered quite a bit there. You need to be faster than your nearest competitor. And we used to say we can garner our unfair market share because we want that. We want more. And through agility, and it’s not just about acting quickly, it’s cutting through the noise. So leaders often aren’t acting with confidence out there because they’re trying to act quickly, but they may not be doing the right thing. So sometimes it’s being able to act with confidence. And because many companies are drowning in data, they’re starving for clarity of what to do next, and the good ones stand out, they can filter through those early risk signals and align strategic priorities. So they already know what their strategic priorities are. So if you have 10 strategic priorities, you probably don’t know what your strategic priorities are, so you need two or three, otherwise you’re going to meander.
It’s tying all that together that is really important. One of the areas that I’ve seen that drives faster is to minimize downtime. So they had to protect their commitments, preserve customer trust and often create opportunities to win share when competitors are still scrambling. Obviously that’s what we’re talking about in that sense. Resiliency isn’t about surviving disruptions. And you said this earlier, Dave, it’s about converting disruptions into differentiation, market differentiation with your customers, putting you in a completely different relationship. So again, this gets into trust. If you’re always there and they remember you as being the ones always that are answering their call, then they’re going to give you that unfair market share. And so you’re going to move from the mindset of surviving disruptions into thriving through disruptions. Greg.
Greg Schlegel:
Yep. You bet. I like that Dave, and I’ll follow up on Jim’s comment on trust in a second. But what we’ve heard, Dave, is many of our clients aspire to becoming the preferred customer, the preferred customer, and the preferred supplier. And that comes about with a trust relationship. So I want to inject a thread that Jim talked about trust relationships, especially regarding supply chain risk and resilience. We’ve been working on a project, Jim and I in the consortium for 12 months for the Department of Defense covering supply chain data transparency and trust. Put it another way, our directive from them is to explain to them what data do supply chain share with each other? What don’t they share and why don’t they share? Alright, in terms of, oh, there’s all types of unbelievable data that Jim and I and the team are acquiring. Things like fear, whatcha going to do with the data and so forth.
But what we’ve heard, and we want to share it with the audience, what we’ve heard from a partner who goes to Davos every year in 2025, what that individual witnessed was in private conversations, not in presentations, conversations in the hallway at dinner. The consensus was trust between countries and companies seems to be at its lowest level in 50 years. That’s what he heard and shared that with us. And what we’ve been doing in this project is we’ve kind of taken a premise from Stephen Covey who writes a lot on trust and says, when trust is present between you and your partners activities between our activities between the entities is accelerated and costs decrease. So to us that equates to differentiation as Jim mentioned, top line revenue growth and strategic advantage. So trust is we think a critical success factor going forward. Back to you.
Franziska Nothofer:
Thank you Greg. The very interesting element is that trust really serves in an accelerator and activity helps decrease cost. I thought that was a very interesting point you mentioned there that really ties into all the different elements we’re touching on today as a foundation. And now let’s explore how companies can move from identifying risk to acting on them and keeping the communication consistent to consequently create value. Greg, many companies are strong at identifying and assessing risk, but fewer translate those insights into measurable outcomes. So what does an effective successful framework look like to make that happen?
Greg Schlegel:
Terrific question. We’ve been in this space for 15 years. Our mantra for a successful SCRM journey has always been identify the risks, assess the risks, mitigate the risks, and manage the risks in your supply chain. So many exemplar companies, and we’re not Gartner, we don’t track, but we have information that there’s about 450 companies out there around the globe that we consider exemplar supply chain risk management companies that follow this stepwise progression. So remember SCRM is a journey. However, identifying and assessing the risks to us it’s an academic exercise. What do we mean by that? There’s no real overt action. If you identify and assess risks, that’s all good, but there’s no overt action required in that analysis. The value add to us and the ROI in an SCRM journey is it comes out in the mitigation process. Alright, so what’s the definition of mitigation for the audience?
Taking action to reduce the likelihood or impact to the risks within your supply chain. So mitigation can take several forms, it can take a proactive form. This can involve maybe digitizing your supply chain. Why to run what if scenarios and building out mitigation plans to be better prepared than most to handle risks. It can also take the form of being responsive. This can include things like a crisis management team like Cisco Nissan, BMW, and many other supply chain risk management exemplars, exercise and have at the ready some examples of risk mitigation tactics for you today. Dual sourcing, I believe David talked about that. How about this one? Product and customer segmentation. If you’re not doing that, that is a form of risk mitigation, reserving your capacity as David was talking about, locking in supply of scarce materials, preventative maintenance, buffer inventory, supplier, financial health dashboards and compliance audits.
Those are classical risk mitigation tactics that you can exercise as David said in day one. You can do that without super computers and all kinds of programs. And finally, some of the benefits, we want to share that with you first. If and when you build a supply chain risk management program, there’s something that you will experience and that’s cost reduction. What do we mean by that? As a company moves forward and builds out a mature SCRM program, insurance premiums can be reduced. We’ve seen it. Clients have told us by more than 10%. Why? Because the company has demonstrated to their insurer, they have a robust SCRM program that includes people, processes, data and technology also as a company begins to automate their SCRM workflow that produces repeatable and quality processes. And again, the cost of the program can decrease. The second there’s cost avoidance. What do we mean by that?
As a company matures, they improve their effectiveness in detecting, assessing and mitigating risks in their supply chain. So additionally, reducing the cost of their program to identify, assess and mitigate. If a company reduces the cost in their supply chain risk management program, they can improve the company’s working capital and free cash. We’ll talk a little bit more about that in a second. The third is the benefits. Financial benefits. We’ve had clients, here’s something completely different. We’ve had clients take their CROs, chief risk officers or M directors on sales calls, why the CRO articulates to that particular Prospect M program, its benefits derived for them and ultimately makes the case that their company is less of a risk and more responsive to the customer’s needs than their nearest competitor. We talked about risk is essentially a relative issue. During this time in the journey, the company captures new sales from that sales call that have been attributed to the CRO advocating the risk program. They can calculate a hard ROI, it’s new sales attributed by that discussion versus the cost of the program RM exemplar companies that exercise these and more SCRM best practices. There are guys like Bayer Crop Science, Bayer Material Science, Cisco Flex, IBM, Zara, those folks do what we just talked about during this seminar and much more. So I wanted to share with you the mitigation. It’s the hardest thing to do in supply chain risk management, but it bears fruit over to Jim.
Jim de Vries:
Yeah, great points. You nailed the importance of moving between the identification and the assessment into real mitigation. I’d just like to add that we were doing that back in the days in the nineties at GE of talking about our problems with our customers and you were mentioning it like the CROs, when you’re clean with your customers, you build trust and when you do that they open up their problems and all of a sudden you’re talking about problems and you find out that they’re the same problems and now you’re working together as a team both on the customer end and the supplier end. So building that relationship of trust is absolutely critical if you want to get to speed in making decisions and to operationalize this with trust and clarity, and we’ve seen that ROI emerge with risk insights that have translated into what we call decision velocity.
How fast can you make a decision that is important to the business, not just your own business but of all your stakeholders in the business. Have you torn down the walls within your company and are you tearing down the walls between your customers and your suppliers so that you can really build that trust not only in your first tier, but your goal is to get to end tier. Now that’s a tall order, but if you can at least get to your first tier and you can show them how it works, then they can take their top 10 suppliers and they can do it with their top 10 suppliers. That’s the way it’s going to free up for us all so that we can start gaining this speed of information. So back in the day with another company, in the last 10 years I worked with global company.
We mapped all the supply chain processes down to the second suppliers and to our customers and we identified all the risks just like it’s written in the book. And we came up with the risk register and everything and I was back home out of China, wasn’t in China that week. And I got this call from somebody in Asia and they said, Jim, they were all excited jumping up. She was screaming, Jim, it worked. It worked. We implemented that. That one idea that we talked about in a session, I can’t remember which one it was because we did hundreds of them, we implemented it and we saved a half million dollars. The customer loves us and everything and I’m like, wow, this is great. And it’s like they drank the Kool-Aid, so to speak, of trust up and down the supply chain. So all I can say is three points. Clarity and knowing which risks matter the most, trust in the data and the partners that you rely on. And three speed turning those insights into action with that. Dave?
David Shillingford:
Yeah, lots there. Good stuff. I’ll jump on a couple of things. You mentioned scenario planning, Greg, we’re hearing more and more people talk about that. I think the thing I would point to there is a necessity for that to be multidimensional. We see a lot of people building tariff risk tools. The thing I would say there is there’s no point in doing that If you’re looking along a single dimension, you’ve got to be looking at every dimension, every variable. Otherwise you may move in the wrong direction. You may solve one problem, but you may make another problem worse just to double click on without action, there is no value. Therefore, when you think about supply chain risk management, start with action. What outcome do I want? Therefore what actions must I take? Can I take, is it possible for me or my partner to take?
What insights do I need to take those actions? Therefore what risks should I be looking at and how should I model my supply chain? Risk companies tend to start with risk, that’s okay. But I would say start with action if there’s nothing you can do, okay, move on to the next thing. Insurance. You mentioned insurance. I think that’s super interesting because people, again, it’s something that people they talk about in general and it’s important to be specific about that. So understand the type of insurance that you are buying and how that maps to your supply chain. Risk management, for example, contingent business interruption, I won’t go into that, look it up. But it relates to sub tier mapping that’s important to insurers, it’s important to supply chain managers. There’s a great fit there when you think about data and analytics. Transportation risk is another one, watch this space.
But you’ve got digital insurance platforms that can now look at risk at a shipment level, whether or not it’s being actually sold individual, it could be an annual policy, but looking at risk through insurance at the shipment level allows the alignment of the interests of risk transfer and the interests of on time and in full delivery. And finally I’ll say I love the idea about sales. How can supply chain risk management support sales? Last week I was talking to a global manufacturer and they said, these days, every time someone comes in to visit a client or a potential client, they will always ask, what are you guys doing to help with supply chain continuity? Every time a hundred percent of the time he said, it no longer is a, I wonder if they’ll ask. And so they figured out how to answer that question in a sales environment in a very precise way. And he said, actually it can be a little hard. So the thing we love to do if we can, because we bring him into our command center, and I dunno if I’m allowed to say this bit, he goes and we show him the everstream screen. He goes, that’s great.
Awesome. The war room, that’s right. Room.
Jim de Vries:
Fantastic.
David Shillingford:
Back to you. Brilliant. On that note,
Franziska Nothofer:
Thank you all without action. There’s no value. That’s a really great shared, some great concrete examples for value derived from specific risk medication tactics never mentioned here. And really being able to measure and communicate those results brings us to one of the biggest value enablers of all, which is data and analytics. Essentially, David, back to you. Data and predictive analytics have transformed how companies approach risk. Now, how can organizations actually use these insights day-to-day to not only anticipate disruptions, but also to identify efficiencies and even gain a competitive advantage in the market?
David Shillingford:
So I’m going to take a page out of the retail industry here, and something that retailers have discovered over time is that the analytics that they were building around loss control and asset protection, so think shoplifting, insider theft, returns broadly called shrink, very, very impactful to a retailer’s bottom line and associate safety and things like that. So they spent a lot of time really getting into the point of sale data and building analytical tools to figure out where things are going wrong and where they are losing things. It turns out that the analytic you use to find bad customers is the same analytic you use to find good customers. My point is that there’s upside and there’s downside and it’s the same data and it’s very largely the same analytics. So if you think about supply chain risk management through that lens, the opportunity is to say, okay, here’s where I’ve got more risk than I want.
So I need to mitigate that or I need to build muscles to be more agile, the things we’ve been discussing. But if that is true, if there are parts of your supply chain where you’ve got too much risk, are there parts of your supply chain where you haven’t got enough risk? And that maybe that’s the wrong way of saying it. Maybe a better way of saying it is if you take inventory as an example is can I reduce my inventory level at this place at this time and still be okay? And that when we think about the data and the analytics that are being built around supply chain risk management companies have got to be looking at it through both sides of it. It’s more risk, less risk. The idea of my strategy is just in time or just in case. I think it’s a false question, it’s a false comparison.
It should always be I want the minimum inventory that I can have, but what should my safety stock be in this place at this time with this customer, with this supplier, and with the right data that should be variable. Over time things change. And the automotive industry has been very good at this because they want to be lean, but the really good companies are looking upstream and saying, okay, things are going wrong. I need to increase my inventory. And other companies should be doing that as well. Massive opportunity there. Another example is equipment optimization. So take for example, cold chain CPG company has built an analytic to predict temperature risk. So they’re looking at their distribution. In this case it’s mayonnaise, sometimes it needs refrigeration, sometimes it doesn’t. And the original analytic was to reduce lots. It was to say we need to make sure that if the temperature’s going to be below X for a certain amount of time, we have refrigeration, we want to analyze that shipment by shipment days or weeks before it actually leaves.
But if you look at the analytic and if you talk to that CPG company now, they’ll say, yeah, sure we’ve reduced the risk, we’ve reduced our losses. But here’s the real kicker. You look at the other side of it, they’ll tell you they’re not using reefer when they don’t need to. They’re saving millions of dollars in transportation, reducing emissions. It’s the same analytic that they built to reduce risk, has created operational efficiency and cost reduction that can be measured shipment by shipment day by day. And it’s the same analytic. So risk management, the data that’s used for risk management, the analytics can be used just as much to go after upside opportunities as to reduce downside. So Greg, what would you add?
Greg Schlegel:
I like that. In fact, there seems to be a, just for the audience, a robust discussion in the C-suite with our clients and others about cost out, which is efficiency versus resiliency, which is being effective. So I think you’re talking about the two-sided coin of risk management. So I wanted to reinforce that and I’ll say another, give another thread I’d like the audience to go away with, and you touched on it, Dave. Risk management is a two-sided coin. One side is the potential negative impact on your company, which we talked about. The other side is what we call risk opportunity, which I think we’ve been threading over the discussion. So just think of it this way. One company’s risk event can be another company’s risk opportunity. I think that’s where you were going as well, Dave, but it’s really been the last year where we know that C-suite discussions are talking about the balance between the cost out, which is efficiencies for our supply chain versus being resilient, which we think of as being effective. So I just wanted to reinforce your spreads there, Jim.
Jim de Vries:
Yeah, I just reinforce that I think we all know that risk is a four letter word and you can use that in both contexts. So that’s a really great point. I won’t build on that right now, but I will bring up another dimension here. And that is predictive analytics. Because a lot of folks have a bunch of people sitting up in a ivory tower doing predictive analytics, but they’re not attached to the business. This is one of my pet peeves, sorry. And so they’re doing all these forecasts and you’re paying them a lot of money, but it’s at the strategic level and it doesn’t connect to the SNOP that’s going down on the factory floor. So unless you’re able to connect your predictive analytics or forecasting and even your risk signals, unless you’re able to connect it to your operations through what Greg and I talk about sical, strategic level, tactical level, and operational level, unless you’re able to connect those and everybody in those roles understands what they need to do at each level in the organization, you’re going to come across and you’re going to make a lot of mistakes.
You’re going to have delays and decision making. We’ve seen this in spades. I saw this in my last client where they would be up in their ivory tower coming up with strategic plans. They would be ordering materials and the warehouses overflowing with stuff because they said, according to our forecast, we’ll need this material. But it had nothing to do with the actual orders the customer service was taking. And we see this all the time and customer service is saying, we don’t have the stuff we need and the procurement strategy, people are ordering stuff that we don’t need. They’re expiring. We don’t have going back to visibility, we don’t have visibility into that. We have hazardous materials, they have expiration dates. Now we’re building up using space on hazardous materials that are expiring and we don’t have the actual chemicals that we need to make a product.
Linking these things together is the key. Don’t have a bunch of folks doing forecasting out in the ivory tower without linking to actually what the orders are in the day-to-day. That’s my lesson there. And the money that’s been lost. And so what that happens is there’s not enough warehouse. They say, open up another warehouse. Now all of a sudden you have all these chemicals, all this slob, all the slow moving inventory that you have to get rid of. And then finance comes up and says, I don’t want to write it off. Who’s going to write it off? It’s a million dollars, it’s $10 million. No, it’s a hundred million dollars in write-offs. Well, I’m not going to take the hit this year. And those aren’t conversations you want to get to. And meanwhile you’re not even able to deliver out the door. So when you’re using predictive analytics, make sure you’re connecting the time horizons. Thank you.
Franziska Nothofer:
Thank you Jim. And thank you all loads of very helpful insights here for everyone. And that essentially wraps up our panel discussion and we’re moving into the q and a. So if you haven’t already, please drop your questions into the box at the top as we go through the ones that have come in and do keep them coming. So the first question is, from your experience, what channel or format works out best for communicating the value of supply chain risk management internally? It’s a good one.
Greg Schlegel:
I could jump on that. What I witnessed at several of our clients is what they would do is they would build out, once they start their program, they would build out a, what is it? Jim intranet, an internal website
Jim de Vries:
Collaboration room.
Greg Schlegel:
Yep. Internal website where they would articulate all the things they’re doing. This is a supply chain risk management team. Got a team, got an exec, got worker bees, and they would build out an update every day. A website internally in the company. Everyone can see it in terms of what risks they identified, where did they assess them? They prioritized them. They built mitigation tactics. And one of them came to fruition and they actually said it would take seven days to remediate this risk. They beat it and they turn it into a game and they say, we planned on seven days. We actually only took six, therefore was a cost avoidance. And then they put it in the risk register as Jim mentioned, and everybody can read the risk register because there’s something called convenient amnesia. It’s called executive convenient amnesia where I don’t recall what you guys did.
Where’s the value? A risk register provides that. And many SCR exemplars use that not to do a CYA, but to enlighten the troops. And then this company utilized the risk register as a Google search engine. They’re a global company in 160 countries and everyone had access to the website and the risk register and any particular risk that came up. The first thing that the individuals did in that country is to go in and do a Google search to say, did anyone else in the company ever experience this type of risk? And if they did, they see a mitigation plan. They say, they get on the phone, they talk and they go, we’re going to try that and we’re going to try to beat the six days and make it five days because time is money. So I would advocate that if you’re building a team and a program, get yourself an internal website, put in all the stats, put in what we’re doing, why we’re doing it, how we’re saving money, how we help grow the revenue and on and on and on. And a risk register really helps as well. My 2 cents.
Franziska Nothofer:
That’s brilliant. Thanks for sharing that. And I think it’s a very efficient way of regularly sharing the updates and the wins as well, and building customer trust as well because you have everything in one spot and can essentially just extract the data as you need it. Yeah, that’s brilliant. Thank you, Greg. Okay, let’s move on to the next question. How does supply chain risk management directly add value to ESG and compliance KPIs? Who would like to take that one?
David Shillingford:
I’ll make a quick point on compliance because I think that too often you’ll see compliance and supply chain risk management, by which I mean operational risk being dealt with by two different teams. Even if they’re using the same data, they’re doing it in silos and increasingly compliance risk is operational risk. If you or your supplier is shut down because of regulatory compliance, that’s the same as being shut down because there was a fire. So the Venn diagram between compliance and operational risk, the overlap is growing. And the advice would be for operational risk and compliance risk practitioners to get together early in the process, understand the commonality of the underlying operational data that is needed for both functions and to understand where compliance risk becomes operational risk and build a partnership that way.
Franziska Nothofer:
Brilliant, thank you. Okay, let’s move on to the next question. We got time for one more I’d say, and then we’ll get back to you one-on-one on any questions that we couldn’t get to during the live session today. So this one is what operational KPIs improved for most companies once an SERM system is rolled out? Who would like to take that one?
Jim de Vries:
This is like Greg’s chomping at the bit. I hate to take this away from Greg.
Greg Schlegel:
I’ll give my 2 cents and then you can chime in as well. Jim. My first blush reaction to that is cash conversion cycle. All right, we like that as a KPI. Whether the audience is using that cash conversion cycle, it’s free. It’s got three elements, inventory days on hand, receivables and payables. Real simple to calculate. Anybody can calculate it. You can find it on the Wikipedia in Expedia. But if in fact you build, you start to get small wins in supply chain risk management, you will experience cost reduction, cost avoidance. When you do that, you will make a friend with the CFO, you will because that as you get better and better at detecting, assessing and mitigating risks, that allows the CFO’s office to make a better projection on cashflow with a better forecast accuracy, especially if you’re public. So one thing we’ve seen is that when folks use cash conversion cycle as a KPI for their supply chain, it also is a good KPI for risk management because you’re going to reduce the costs, you’re going to reduce inventory, potentially, you’re going to reduce the cost to the treasury in terms of additional costs coming out of your pocket.
So that’s my first flush reaction is cash conversion cycle as a metric.
Jim de Vries:
I’ll just build on some of the points Greg made and something that’s very important when you start your program is hard and soft costs or cost avoidance. You really have to sit down with your finance team and define what the value of cost avoidance is to your company. Because if you don’t, it makes it very difficult for your program because if it’s just pure hard cost cutting type measures, it’s hard to substantiate. And what Greg mentioned on cash conversion cycle links up directly with how much is a day’s worth when you’re planting plant is down? Is it a half a million, a million dollars a day? If you’re able to reduce those risks, those are operational risks of being able to start up on time. Now you take that into the risk environment is how quick can you recover to a risk event and how many days can you shave off of that risk event? And you have that mindset built into your company and everybody’s looking at that, you will bring in more money, you’ll save more money than you can even believe you have because you’re looking at how do I avoid risk events and recover, as Dave mentioned, the time to recover, shorten that time to recover and bring those dollars into the company and the finance people will be able to see on the books, but you have to get everybody speaking that same language. It’s one of the most important things when kicking off your program.
Franziska Nothofer:
Brilliant. Thank you. Thank you both for that. That was very insightful. And yeah, we’re slowly coming to the end of today’s session and we have one more webinar lined up as part of this supply chain optimization series. We’ve been running through 2025. It’s on the 12th of November and it’ll basically be an ask me anything format on risk and resilience topics with our solutions consultants. So there will be four of them on the line and you can scan the code here to save your spot for this session and bring all your pressing questions for our solutions consultants to prepare for 2026 and everything that’s ahead. Okay, so a big thank you to our panel for sharing their expertise with us today and to all of you for joining us. If you have any further questions regarding the content share today or regarding supply chain and risk management solutions in general, please get in touch with our experts [email protected]. We’ll be happy to help. And we’ll also be sharing out the session recording within the next 24 hours straight to your inbox. Alright, have a wonderful day and rest of your week everyone, and we look forward to seeing you very soon and have a good day.
David Shillingford:
Thanks everyone.
Franziska Nothofer:
Thank you. Thank you. Cheers.
Greg Schlegel:
All the best.