Future of Sourcing - Risk Management http://futureofsourcing.com/tags/risk-management en Tracking the Evolution of Procurement and Where It’s Going Next http://futureofsourcing.com/tracking-the-evolution-of-procurement-and-where-its-going-next <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Tracking%20the%20Evolution%20of%20Procurement%20and%20Where%20It%E2%80%99s%20Going%20Next.jpg"><a href="http://futureofsourcing.com/sites/default/files/articles/Tracking%20the%20Evolution%20of%20Procurement%20and%20Where%20It%E2%80%99s%20Going%20Next.jpg" title="How procurement has evolved throughout its history, why 2020 was such a turning point for the function and where things are headed next." class="colorbox" rel="gallery-node-2146-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Tracking%20the%20Evolution%20of%20Procurement%20and%20Where%20It%E2%80%99s%20Going%20Next.jpg?itok=RFF9pNnt" width="624" height="325" alt="How procurement has evolved throughout its history, why 2020 was such a turning point for the function and where things are headed next." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Omer Abdullah, Co-Founder of The Smart Cube, explores how procurement has evolved throughout its history, why 2020 was such a turning point for the function and where things are headed next.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/4-predictions-that-will-shape-procurement-in-2022">4 Predictions That Will Shape Procurement in 2022</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>From the outside, procurement appears to be a relatively static department focused on one core goal: Acquiring the right goods at the right price.</p> <p>But behind the scenes, procurement teams have been silently evolving. They&rsquo;ve been growing their capabilities, creating value in new ways and driving growth while ensuring business continuity.</p> <p>Procurement has slowly transformed from an expert cost controller into a major creator of business value, without many people outside of the function recognizing it until very recently. The disruptive events of 2020 and 2021 provided the perfect opportunity for procurement teams to step into the spotlight and show what they&rsquo;re capable of today.</p> <p>In this article, I&rsquo;ll walk through procurement&rsquo;s decades-long evolutionary journey, look at the powerful position the department has taken up today, and examine what might be next for leading procurement teams.</p> <h2>Procurement&rsquo;s Roots: Sourcing What&rsquo;s Needed at the Right Price</h2> <p>The procurement function was initially created to enable organizations to improve the consistency of supply and increase profit margins.</p> <p>By building robust supplier portfolios and making better-informed supplier choices, procurement teams had a major impact on how businesses operate. Strategies like just-in-time manufacturing were enabled by this approach, bringing previously unimaginable levels of output and efficiency to manufacturing and retail organizations.</p> <p>But procurement built its reputation with cost savings. By bringing such tangible benefits to their organizations&rsquo; bottom lines, procurement teams quickly became cost-saving heroes. It&rsquo;s a legacy that has stuck with the department and continues to have a huge impact on how teams work.</p> <h2>The First Evolution: Expanding Procurement&rsquo;s Role in Continuity</h2> <p>While cost savings caught the eye, leading organizations quickly acknowledged that procurement teams delivered value by ensuring consistent supply of goods and keeping production and output levels consistent.</p> <p>By building diversified supplier portfolios, procurement teams helped organizations overcome potentially disastrous events &ndash; things like strategic suppliers going out of business or supply of a particular resource from one region drying up.</p> <p>As supply chains went global, so too did procurement teams&rsquo; responsibilities for continuity. They were expected to build and maintain global supplier portfolios and navigate a much more complex international risk landscape.</p> <p>But with that challenge came immense rewards. The precise engineering and management of international supply strategies helped procurement teams deliver new levels of cost efficiency and enabled consistent, year-round supply of seasonal resources.</p> <p>These supply strategies formed the basis of today&rsquo;s globalized trade environment. Over time, these complex, multinational supply strategies have become the norm, with procurement teams at the center of managing global supply networks and mitigating risk across vast supplier portfolios.</p> <h2>Leveraging Relationships: Procurement Becomes a Force for Innovation</h2> <p>In their mission to build resilient supplier portfolios, procurement experts have collaborated closely with suppliers to build mutually beneficial contracts and strategic supply connections.</p> <p>Those relationships have proven hugely valuable from a risk mitigation perspective, giving organizations confidence in their suppliers&rsquo; commitment and ability to continue delivering essential goods in a crisis.</p> <p>But, more surprisingly, the relationships built and maintained by procurement teams have also become a powerful driver of innovation and a source of competitive advantage.</p> <p>Exclusive contracts and co-designed or white-labelled products have created opportunities for procurement teams to directly influence a company&rsquo;s product strategy and provide a new source of competitive differentiation.</p> <p>In many cases, the strong relationships built by procurement teams have created opportunities for organizations and their suppliers to share their expertise and innovate together, growing relationships into true strategic partnerships.</p> <p>Beyond direct relationships with suppliers, procurement has also evolved to influence product and customer strategies through its constant monitoring of category and commodity markets as well as competitors. Procurement teams keep a constant watch on what&rsquo;s happening in relevant markets, and they&rsquo;re often the first to notice important developments that could influence wider business strategy.</p> <p>That insight has enabled leading procurement teams to collaborate closely with key product strategy stakeholders. Events like the emergence of a new material or component, the growth of a new competitor, or a shift in customer preferences for particular goods can all influence product strategy and create opportunities for innovation.</p> <h2>Becoming Data-Driven: Procurement Gets Proactive</h2> <p>The most recent development in procurement&rsquo;s evolution story has been the rise of the data-driven procurement team. Using data to make informed supplier, commodity, category or risk decisions is nothing new for those in procurement, but the emergence of new data sources and sophisticated insight-delivery tools has transformed what the function can achieve.</p> <p>Advanced analytics, AI, and the availability of expertly curated datasets and insights have all helped procurement teams learn more than ever before about suppliers, market and commodity trends, and emerging risk factors. Crucially, they&rsquo;ve helped procurement teams evolve from spending long periods of time analyzing historic information, to enabling truly proactive procurement operations.</p> <p>That&rsquo;s where leading procurement teams are today. Conveniently delivered, reliable, and timely insights enable them to detect trends and act quickly to create new value, optimize supply strategies and mitigate risk proactively &ndash; transforming supply and market threats into lucrative opportunities.</p> <h2>What&rsquo;s Next: Procurement as the Number-One Driver of Strategic Business Value</h2> <p>Nobody can say for sure what the future of procurement will look like. But the disruptive events experienced in 2020 and 2021 have given us an interesting look at what the future could hold.</p> <p>By managing one of the most disrupted and complex global supply environments ever seen, leading procurement teams demonstrated the value of the capabilities they&rsquo;ve developed.</p> <p>What emerged was a powerful combination of all of procurement&rsquo;s major evolutions to date. Teams generated real-time insights and intelligence to mitigate risk, used strategic relationships to maintain supply of essential goods and proactively optimized supply strategies to turn major challenges into new value creation opportunities.</p> <p>Procurement has been pivotal in helping businesses understand their exposure to crisis events and in maintaining operational continuity amid widespread disruption.</p> <p>Procurement teams have shown why they have the potential to become the number-one driver of strategic value in the modern business. And for the first time, decision-makers across the organization are starting to see it, too.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/e-procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">e-procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/business-continuity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Continuity</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier-relationship-management-srm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relationship Management (SRM)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/the-smart-cube" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">The Smart Cube</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Tracking the Evolution of Procurement and Where It&amp;rsquo;s Going Next - Future of Sourcing" addthis:url="http://futureofsourcing.com/tracking-the-evolution-of-procurement-and-where-its-going-next"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 09 Mar 2022 02:00:00 +0000 Omer Abdullah 2146 at http://futureofsourcing.com http://futureofsourcing.com/tracking-the-evolution-of-procurement-and-where-its-going-next#comments Using Procurement Analytics to Become an Agent of Change http://futureofsourcing.com/using-procurement-analytics-to-become-an-agent-of-change <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Using%20Procurement%20Analytics%20to%20Become%20an%20Agent%20of%20Change.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Using%20Procurement%20Analytics%20to%20Become%20an%20Agent%20of%20Change.png" title="Using Procurement Analytics to Become an Agent of Change" class="colorbox" rel="gallery-node-2063-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Using%20Procurement%20Analytics%20to%20Become%20an%20Agent%20of%20Change.png?itok=N5hbYfIp" width="624" height="325" alt="Using Procurement Analytics to Become an Agent of Change" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Using Procurement Analytics to Become an Agent of Change</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-three-pillars-of-successful-supply-chain-risk-management">The Three Pillars of Successful Supply Chain Risk Management</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The role of procurement is changing. Okay, I know &ndash; you&rsquo;ve heard that before. But after the events of 2020 and the ongoing repercussions, that change has been hugely accelerated.</p> <p>Increased market volatility and a high risk of supply chain disruption have placed pressure on procurement teams to maintain profitability, better manage working capital, mitigate third-party supplier risks and drive business sustainability. As a result, those teams are playing a more central and strategic role in their organizations.</p> <p>This role requires the latest tools, technologies and insights to succeed. And at the forefront of those technologies is procurement analytics.</p> <h2>The Changing Role of Procurement</h2> <p>It&rsquo;s hard to find many positives in a global pandemic. But for procurement teams, the last year&rsquo;s events have seen the function elevated to a new standing in many organizations.</p> <p>Departments are now expected to drive value beyond savings. They are responsible for effectively managing category and supplier risk, guiding supplier-enabled innovation, ensuring organizational agility, and steering digital adoption and sustainability initiatives.</p> <p>During a recent webinar we hosted on how procurement leaders become an agent of change, attendees echoed these sentiments. When asked about the top three impacts on their business environment, we saw a relatively even spread across a range of drivers:</p> <ul> <li>Budget pressure to recover profitability and preserve cash &ndash; 64%</li> <li>Higher risks of supply chain disruption &ndash; 55%</li> <li>Changing ways of working &ndash; 52%</li> <li>Increased market volatility and complexity &ndash; 51%</li> <li>Drive for sustainability &ndash; 43%</li> <li>Skills evolution &ndash; 32%</li> </ul> <p>At the heart of each of these demands, whether it&rsquo;s reducing risk or improving profits, is the need for insight-led procurement. And that&rsquo;s where procurement analytics comes in.</p> <h2>What is Procurement Analytics?</h2> <p>Simply put, procurement analytics is the process of turning data into actionable insights to address procurement priorities.</p> <p>At its most basic level, procurement analytics can help us make data-driven decisions to better manage spend and supply chain risks among other things. But there&rsquo;s a great deal more to it than that. There are four stages of procurement analytics maturity that make up a roadmap for change, from the basic use of data to more advanced modeling and insight.</p> <ul> <li>Data management &ndash; The first step of a procurement analytics journey is to build a robust and standardized repository of data that can provide insight into your organization&rsquo;s purchasing.</li> <li>Descriptive analytics &ndash; Descriptive analytics can then help you understand the story that data tells and provide insight into real-time reporting metrics and KPIs.</li> <li>Diagnostic analytics &ndash; Using external and internal benchmarks, category levers, and risk and root-cause analysis, you can then begin to understand precisely <em>why </em>these things are happening.</li> <li>Prescriptive and predictive analytics &ndash; Finally, using predictive and prescriptive analytics alongside forecasting and simulation models, you can gain insight into what will happen next &ndash; and optimize strategies to get ahead of the game.</li> </ul> <h2>Roadblocks, Key Considerations and Readiness</h2> <p>During our recent webinar, only 9% of attendees said they&rsquo;re currently implementing predictive and prescriptive analytics. And 29% said they were still largely focused on spend analytics.</p> <p>So, what&rsquo;s slowing adoption? Most organizations are aware of the value of analytics &ndash; more on that later &ndash; but they often struggle with data-, insight- and adoption-related challenges.</p> <p>There are four common obstacles:</p> <ul> <li>Lack of quality data &ndash; Any analytics solution is only as good as the data that fuels it. But many organizations struggle to access clean and reliable data from the numerous systems across their IT landscape.</li> <li>Legacy technology &ndash; Obsolete tech, including the multiple, home-grown custom ERP systems that many Procurement organizations rely on can also prove a substantial barrier to actionable insight. Even today, many procurement functions rely heavily on spreadsheets, which makes extracting data a mammoth challenge.</li> <li>Insufficient support<strong> &ndash; </strong>For analytics projects to work, you need the proper support and funding. But convincing stakeholders and proving ROI can be difficult. That said, there&rsquo;s perhaps never been a better time to put a business case together than right now.</li> <li>A shortage of talent &ndash; Finally, driving effective analytics requires relevant skills. But a shortage of talent can make those skills hard to come by.</li> </ul> <h2>Are You Ready for Procurement Analytics?</h2> <p>With these factors in mind, it&rsquo;s essential to assess your readiness before embarking on any procurement analytics project. You need to evaluate the current level of technology adoption in your organization, and whether your team is tech-savvy enough to adapt to new technologies quickly.</p> <p>From a business perspective, you need to consider whether or not you have the stakeholder buy-in and company culture required to adapt to change and relinquish outdated practices and technologies.</p> <p>Finally, you need to have the right policies and processes in place to support the adoption of your analytics strategy.</p> <p>Check out our <a href="https://www.thesmartcube.com/resources/videos/using-procurement-analytics-to-become-an-agent-of-change/" target="_blank">webinar on-demand</a> to learn more about each of these projects, and get a 10-point checklist to ensure success in your own analytics journey.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/procurement-analytics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement Analytics</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/the-smart-cube" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">The Smart Cube</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Using Procurement Analytics to Become an Agent of Change - Future of Sourcing" addthis:url="http://futureofsourcing.com/using-procurement-analytics-to-become-an-agent-of-change"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 28 Sep 2021 17:00:00 +0000 Omer Abdullah 2063 at http://futureofsourcing.com http://futureofsourcing.com/using-procurement-analytics-to-become-an-agent-of-change#comments Making Sense of Supply Risk Management Solutions http://futureofsourcing.com/making-sense-of-supply-risk-management-solutions <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Supply%20Risk%20Management%E2%80%99%20Solutions%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Supply%20Risk%20Management%E2%80%99%20Solutions%20%281%29.png" title="From supply chain management vendors to supplier management services, there are different ways companies can manage their risks using third-party sources." class="colorbox" rel="gallery-node-1852-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Supply%20Risk%20Management%E2%80%99%20Solutions%20%281%29.png?itok=FjTf2VmW" width="624" height="325" alt="From supply chain management vendors to supplier management services, there are different ways companies can manage their risks using third-party sources." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/rethinking-the-future-for-resilient-sourcing-and-beyond">Rethinking the Future for Resilient Sourcing and Beyond</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <p>Enterprise risk has never been a higher priority for businesses, executives and procurement practitioners than right now in light of the COVID-19 crisis. The coronavirus disruption has only accelerated many enterprise risks &mdash; from cyberthreats, employee health and safety, and most certainly, to supply risks affecting suppliers in complex value chains.</p> <p>Supply-side practitioners and their corporate risk management and IT peers are staring &nbsp;down these challenges. They are looking for help to scale up their risk recovery capabilities for now and their risk prevention capabilities for the future. Yet, the risk management technology and services markets are fragmented and poorly integrated, mirroring the situation at most organizations.</p> <p>Spend Matters has been conducting an in-depth analysis of this confusing supply market and is sharing Spend Matters&rsquo; knowledge of roughly 50 vendors from research and advisory work that our technology analysts have done in this complex area.</p> </div> <h1>Risk Evaluation</h1> <div> <p>In an ongoing Spend Matters PRO series, we have delved into the world of enterprise risk. First, we provided an understanding of what risk management is with an <a href="https://spendmatters.com/2020/07/06/making-sense-of-the-supply-risk-management-solution-landscape-part-1/" target="_blank">in-depth overview</a>. We then analyzed &nbsp;<a href="https://spendmatters.com/2020/07/08/making-sense-of-the-supply-risk-management-solution-landscape-part-2-comparing-4-of-nearly-50-vendors/">the top four vendors</a> in the supply chain risk management sector to see how they work within this space. We also analyzed <a href="https://spendmatters.com/2020/07/09/making-sense-of-supply-risk-management-solutions-part-3-a-look-at-8-supplier-management-providers/" target="_blank">eight supplier management providers</a> that might be helpful to know. In our latest publication, we offered an explanation of some <a href="https://spendmatters.com/2020/07/31/making-sense-of-supply-risk-management-solutions-part-4-supplier-financial-risk-monitoring-services/" target="_blank">supplier financial risk monitoring services</a> that may help.</p> </div> <p>We see many of our practitioner clients struggling with how to unify all of these stakeholders and systems &mdash; and also just getting the funding needed to do so. They struggle with what types of providers are appropriate to consider beyond the traditional silos as well.</p> <p><strong>So, how can practitioners best manage risk?</strong></p> <div> <p>For procurement and supply professionals, managing risk is challenging because they might not necessarily get as much credit for reducing supply risk as they do for reducing supply costs (spend). But risk impacts their ability to help the business accomplish its goals, and supply risk management is about protecting the supply/service lines that support those goals.</p> </div> <h1>Risk: The Good, the Bad and the Ugly</h1> <p>The &ldquo;good&rdquo; is the ability to extend and integrate enterprise risk and compliance to external partners of your business &mdash; if you can do it! If the goal is to reduce enterprise risk, there is value in extending risk management processes outside the four walls of your trading partners. Make sure that your internal stakeholders are on board with the initiatives for business continuity planning (BCP), corporate social responsibility (CSR), IT risk management and other areas.</p> <div> <p>As such, the &ldquo;bad/ugly&rdquo; aspect of poor alignment is the inability to execute these aligned processes given the fragmented terminologies, methodologies, regulations, stakeholders and solution providers/markets vying to help solve these issues.</p> <p>And supply risk management is a two-headed beast:</p> </div> <ul> <li>The ability to manage and mitigate RISK within the SUPPLY MANAGEMENT function (i.e., source-to-pay and broader value chain), including within the supplier management process</li> <li>The SUPPLY-side aspect of enterprise RISK MANAGEMENT where enterprise risk and compliance (including to CSR/ESG goals) requirements get extended out to supply chains and third parties (e.g., suppliers!)</li> </ul> <div> <p>&nbsp;</p> <p><img alt="● The ability to manage and mitigate RISK within the SUPPLY MANAGEMENT function (i.e., source-to-pay and broader value chain), including within the supplier management process" src="https://futureofsourcing.com/sites/default/files/supply%20risk%20management.png" style="width: 864px; height: 375px;" /></p> <p>&nbsp;</p> <p>We can&rsquo;t delve into all the organizational issues here &mdash; like the philosophical battle of whether ERM or GRC is the best top-level methodology; or where sustainability best slots in; or even who should own TPRM (third-party risk management) organizationally. Regardless, when you start &ldquo;connecting&rdquo; the dots across (and within) these domains, you&rsquo;ll see the potential linkages that are needed &mdash; and how many are lacking.</p> <p>&nbsp;</p> <p>But, some basic definitions of the model are in order:</p> </div> <ul> <li><strong>Enterprise Risk Management / GRC</strong> isn&rsquo;t a subset of supply risk management, but rather, a superset. It provides the &ldquo;backplane&rdquo; that supply risk management should plug into. For example, managing vendor/supplier risk for IT suppliers must take into account IT risk management requirements from IT and from broader ERM/GRC requirements (and specific customer requirements).</li> </ul> <p style="margin-left:.5in;">The same goes for supply chain risk management docking into business continuity planning (BCP). And supplier compliance should dock explicitly into corporate compliance within ERM/GRC (e.g., regulatory compliance for supplier diversity, sustainability and so on).</p> <ul> <li><strong>Third-Party Risk Management</strong> (TPRM) is also an area that is both part of ERM/GRC and also a slightly larger superset of supplier risk management (*note that we&rsquo;ll generally use the word &ldquo;supplier&rdquo; vs. &ldquo;vendor&rdquo; even though the latter shows up very often) because it also includes customers (e.g., KYC due-diligence processes to &ldquo;know your customers&rdquo;).</li> </ul> <p style="margin-left:.5in;">In other words, supplier risk management is a form of TPRM, just as supplier contract lifecycle management (buy-side CLM) is part of broader enterprise CLM. Many organizations struggle with the decision of what apps to use here since they want both the ERM/GRC integration with TPRM and the source-to-pay suite integration with supplier risk management.</p> <div> <p>Within Supply Risk:</p> </div> <ul> <li><strong>Supply Chain Risk Management</strong> can be a superset of supplier risk management (because the supply chain is a collection of multi-tier suppliers). But it also is a subset because it focuses primarily on supply continuity rather than other risks, such as product quality risk, price risk, IT/cyber-risk, etc. We chose the former assumption for convenience and because these solutions have much broader data models than just supplier risk management solutions. Also, there&rsquo;s a layer in between the supply chain and the supplier &mdash; namely the category. This is shown below:</li> </ul> <p><img alt="● Supply Chain Risk Management can be a superset of supplier risk management " src="https://futureofsourcing.com/sites/default/files/Enterprise%20Risk%20Management.png" style="width: 805px; height: 447px;" /></p> <p>Now, you might be wondering how the actual landscape of risk works. Below is a list of the main categories within risk management:</p> <ul> <li>Supplier Risk Management</li> <li>Supplier Financial Risk Management</li> <li>Contingent Workforce / Services Risk Management</li> <li>Supplier Risk Monitoring</li> <li>Supplier Compliance Management</li> <li>Fraud Prevention and Detection</li> <li>Contract Risk Management</li> </ul> <p>You can read an explanation of each risk category <a href="https://spendmatters.com/2020/07/06/making-sense-of-the-supply-risk-management-solution-landscape-part-1/" target="_blank">here</a>, where we also present a graphical framework of the above categories and how they relate to one another.</p> <div> <p align="center"><a href="https://sig.org/spend-matters">&gt;&gt;<em>SIG </em></a><em><a href="https://sig.org/spend-matters">Members</a></em><em><a href="https://sig.org/spend-matters" target="_blank">: Get access to Spend Matters&rsquo; SolutionMap Accelerator and associated knowledge base (Insider and PRO subscriptions) at a discounted rate&lt;&lt;</a></em></p> </div> <h1>Managing Risks using Third-party Sources</h1> <p>From supply chain management vendors to supplier management services, there are different ways companies can manage their risks using third-party sources.</p> <p>And just like in any industry, there are some key players. We shared 50 of the vendors making a difference <a href="https://spendmatters.com/2020/07/08/making-sense-of-the-supply-risk-management-solution-landscape-part-2-comparing-4-of-nearly-50-vendors/" target="_blank">already.</a> For example, in the supply chain risk management space, there are three key players: Resilinc, Resilience360 (a DHL spinoff) and riskmethods. But there are also more niche providers if you want supplier intelligence monitoring or supply chain mapping.</p> <p>For S2P, risk is usually pegged into supplier management, often called &ldquo;supplier lifecycle management.&rdquo; Practitioners struggle with this area because of its complexity (e.g., based on the number of critical suppliers and risk types), more nuanced business case, and number of internal stakeholders.</p> <h1>Supplier Risk Management</h1> <p>Providers like Allocation Network, APEX Analytix, Coupa, HICX, Ivalua, Jaggaer, Procurence and State of Flux can work alongside other types of vendors targeting <a href="https://spendmatters.com/2020/07/09/making-sense-of-supply-risk-management-solutions-part-3-a-look-at-8-supplier-management-providers/" target="_blank">supplier risk management. </a></p> <div> <p>However, supplier risk management can still be a daunting problem to tackle when procurement leaders are not always measured on supply risk success. In a study that we did a few years ago with over 200 procurement professionals, we found that 53% of them weren&rsquo;t even measured explicitly on reducing supply risk. So since &ldquo;what you measure is what you get,&rdquo; procurement may not always be leading the charge here.</p> <p>That said, no CPO wants to be caught off guard if a critical supplier goes bankrupt, and this is why a higher percentage of firms will perform a subset of supplier risk &mdash; supplier financial risk monitoring for critical suppliers. CAPS Research from April <a href="https://www.capsresearch.org/blog/posts/2019/april/research-measuring-and-managing-risks/" target="_blank">found </a>that 72% of surveyed firms are currently using third-party tools to monitor their suppliers&rsquo; financial performance.</p> <p>The market for <a href="https://spendmatters.com/2020/07/31/making-sense-of-supply-risk-management-solutions-part-4-supplier-financial-risk-monitoring-services/" target="_blank">supplier financial risk monitoring</a> is especially challenging because it&rsquo;s complex, poorly regulated and not well understood. This leads procurement leaders to make suboptimal choices &mdash; running the risk of underprotection, overpayment and a deluge of &ldquo;false positive&rdquo; alerts. Even so, this area is obviously a huge concern right now, given the pandemic&rsquo;s adverse impact on most supplier&rsquo;s financial health (or on their capacity if they&rsquo;re one of the few &ldquo;winners&rdquo; in the market).</p> <p>Risk management has become front and center in most organizations&rsquo; strategies. The timing also couldn&rsquo;t be more critical given what&rsquo;s happening with COVID-19 and the impact that it&rsquo;s having on so many suppliers right now. Especially for smaller or private suppliers that don&rsquo;t have strong capital reserves to weather the prolonged crisis that looks to be hanging around for at least another 12 months.</p> </div> <h1>Next Steps</h1> <div> <p>Check back with <a href="https://spendmatters.com/tag/pro,plus/">Spend Matters PRO coverage</a> to read the next installments in our series on risk management solutions. We&rsquo;ll discuss many more vendors and their capabilities.</p> </div> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/third-party-risk-management-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Third-Party Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/coronavirus" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">coronavirus</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier-risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-mitigation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Mitigation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier-risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Risk</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Making Sense of Supply Risk Management Solutions - Future of Sourcing" addthis:url="http://futureofsourcing.com/making-sense-of-supply-risk-management-solutions"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 07 May 2021 02:00:00 +0000 Pierre Mitchell 1852 at http://futureofsourcing.com http://futureofsourcing.com/making-sense-of-supply-risk-management-solutions#comments A Look Back on 25 Years: Key Procurement Milestones and What’s Next http://futureofsourcing.com/a-look-back-on-25-years-key-procurement-milestones-and-whats-next <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/25%20years%20of%20procurement%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/25%20years%20of%20procurement%20%281%29.png" title="There’s no doubt 2021 will be a pivotal year for every business. As we think about what’s next for the procurement function, let’s first appreciate how far we’ve come. " class="colorbox" rel="gallery-node-1904-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/25%20years%20of%20procurement%20%281%29.png?itok=7sACk4_1" width="624" height="325" alt="There’s no doubt 2021 will be a pivotal year for every business. As we think about what’s next for the procurement function, let’s first appreciate how far we’ve come. " title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/seven-steps-to-progressing-artificial-intelligence">Seven Steps to Progressing Artificial Intelligence</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Twenty-five years ago, the internet was in its dial-up infancy, businesses still relied on fax machines and procurement was considered solely a back-office, cost-cutting function that controlled the organization&rsquo;s purse strings.</p> <p>But times have certainly changed. This past year alone has proven procurement plays a key role in organizational resilience. Due to COVID-19, teams have had to navigate some of the most widespread and severe supply disruptions and cash issues we&rsquo;ve seen in decades. Many have stepped up to meet society&rsquo;s call for greater inclusivity, strengthening relationships with diverse supply partners.</p> <p>There&rsquo;s no doubt 2021 will be a pivotal year for every business. As we think about what&rsquo;s next for the procurement function, let&rsquo;s first appreciate how far we&rsquo;ve come.</p> <h1>Making Moves: From Tactical to Strategic</h1> <p>Modern procurement was born when FreeMarkets conducted the first online reverse auction in 1995. While auctions, like strategic sourcing and category management, were already established concepts, the real-time competition enabled by technology completely shifted sourcing mentality. No longer bound by sealed bids, suppliers had greater chances of winning business, and buyers had more product and material options from which to choose.</p> <p>At first, online reverse auctions focused on price and essentially ignored other competitive factors, such as quality, lead-time, capacity, value, sustainability and more. Before long, the industry realized making the right sourcing decision goes far beyond cost. Platform providers expanded capabilities to take all supply considerations into account.</p> <p>The development of sourcing optimization helped buyers make the best possible decision for their business, based on their unique constraints, criteria and rules. This advancement opened up the opportunity for procurement teams to become even more strategic and intentional. As AI sourcing optimization models have been built upon and become more sophisticated, adapting to buyer preferences and using that information to identify new scenarios, evaluate the strength of supplier bids, address complex categories and guide users to an ideal solution, procurement leaders are now in a strong position to advance the organization&rsquo;s goals intelligently.</p> <h1>Changing Perception: Procurement Isn&rsquo;t Just About &ldquo;Buying Things&rdquo;</h1> <p>With technology incrementally expanding procurement&rsquo;s reach and value, the function has progressively become instrumental to a number of organizational initiatives, even solidifying its spot at the executive table with the role of Chief Procurement Officer.</p> <p>The biggest benefit of procurement&rsquo;s digital evolution is increased agility. The function is much better equipped to adapt and solve problems through the most unprecedented disruptions. This type of flexibility has proven vital throughout the global health and economic crisis as healthcare organizations have had to get personal protective equipment and other critical suppliers in the door quickly. Meanwhile, higher education establishments have had to shift and manage successful procurement, payment and teaching environments remotely.</p> <p>Fueled by the gravity of issues like climate change and social inequity, a growing number of companies have redefined their commitments to social impact with procurement playing a starring role. In 2012, the Social Value Act required public sector organizations in the U.K. to consider economic, social and environmental well-being in their public service contracts, but also put forth the idea that procurement has the power to improve societal outcomes.</p> <p>Consumer and societal pressure on private sector companies to behave responsibly and &ldquo;do the right thing&rdquo; is also mounting. Many procurement leaders today carry out this purpose through transparent, ethical, equitable, and sustainable practices that protect communities and support supply partners while driving the business forward.</p> <p>Procurement has tremendous purchasing power that can advance corporate commitments, reduce risk, drive process innovation, foster diversity, create positive social impact, protect the environment and so much more. As we head into 2021 facing ongoing uncertainty and new challenges to solve, there&rsquo;s incredible professional and organizational opportunity for teams that lead the charge.</p> <h1>Automation: Procurement&rsquo;s Next Frontier?</h1> <p>Over the years, we&rsquo;ve seen technology and world events help drive the transformation of the procurement function, but its evolution is far from finished. In fact, automation, AI, and embedded intelligence are already advancing sourcing and spend management practices and laying the groundwork for a truly digital procurement function in the next five years.</p> <p>Imagine that one day you are in your office and you say &ldquo;source.&rdquo; Several weeks later, you are notified that a contract for exactly what you need is ready for review and signature. Your procurement system automatically selected the products or services for sourcing, confidently predicted and invited suppliers to the table, chose the criteria that should be most heavily weighted for evaluation and managed the sourcing event (including constraints, negotiation criteria and more) all without the need for human intervention.</p> <p>Sound unsettling or too aspirational? Maybe, but it won&rsquo;t soon.</p> <p>Autonomous procurement, where an intelligence system learns from humans, adapts its behavior, and learns new tasks and how to respond in specific situations like a seasoned procurement professional , is within reach.</p> <p>Does that mean humans have no future role in procurement? Not at all. Just as a plane on autopilot still requires a pilot to monitor the route and program changes as necessary, autonomous procurement will need procurement professionals to strategically manage the operation. The human component will continue to exist but will be augmented with technology so professionals aren&rsquo;t bogged down with manual interventions that machines can perform. Instead of verifying certain criteria exist before signing off, procurement teams can focus on the work that&rsquo;s most valuable and appropriate for them to do.</p> <p>The next frontier for procurement will be much more predictive and proactive, empowering teams with more capacity to focus on the strategic initiatives their organizations and society need them to drive. Whether its collaborative supplier relationships, cross-industry alliances, or applying AI and machine learning to manage broader risk management initiatives, humans will manage the autonomous procurement framework as opposed to the underlying details. To obtain autonomous procurement, organizations need to double down on making sure their data is clean, complete, accurate and available, as this information is the foundation.</p> <p>Procurement has always been called upon to meet the business community and society&rsquo;s changing needs and it has risen to the occasion every time. The past 25 years have dramatically shifted the role of procurement and created new opportunities for more effective business practices, supplier relationships and more.</p> <p>As we look ahead to a new wave of technological advancement through greater automation and renewed focus on equity, ethics and impact, procurement will become even more strategic and able to navigate the future landscape with the utmost agility.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategic-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategic Sourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/intelligent-automation-ia" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Intelligent Automation (IA)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="A Look Back on 25 Years: Key Procurement Milestones and What&amp;rsquo;s Next - Future of Sourcing" addthis:url="http://futureofsourcing.com/a-look-back-on-25-years-key-procurement-milestones-and-whats-next"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 04 Jan 2021 22:46:04 +0000 Jim Bureau 1904 at http://futureofsourcing.com http://futureofsourcing.com/a-look-back-on-25-years-key-procurement-milestones-and-whats-next#comments Making the Case for Ongoing KYC: Why the Time for Change is Now http://futureofsourcing.com/making-the-case-for-ongoing-kyc-why-the-time-for-change-is-now <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/KYC%20Program%20%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/KYC%20Program%20%20%281%29.png" title="AI can also ensure that learnings from transaction monitoring or false positives are used to refine initial KYC questions, optimizing not just the KYC process but the full AML value chain." class="colorbox" rel="gallery-node-1896-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/KYC%20Program%20%20%281%29.png?itok=E1esmpjT" width="624" height="325" alt="AI can also ensure that learnings from transaction monitoring or false positives are used to refine initial KYC questions, optimizing not just the KYC process but the full AML value chain." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/what-keeps-money-launderers-up-at-night">What Keeps Money Launderers Up at Night?</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>If you work in financial services then you&rsquo;re already aware that knowing your customer (KYC) is not just an essential process, it is also a legal requirement. It&rsquo;s part of the essential tasks banks perform to tackle anti-money laundering (AML) and other financial crimes.</p> <p>Back in June 2017, the European Commission&rsquo;s Fourth AML Directive set out new rules to help combat money laundering. This was supplemented in January 2020 with the Fifth AML Directive, which aimed to increase transparency about who really owns companies and other financial entities.</p> <p>Similarly, in May 2018, the U.S. Financial Crimes Enforcement Network (FinCEN) required banks to verify the identity of customers who own, control and profit from companies when they open accounts.</p> <p>In spite of these efforts, the introduction of KYC policies within banks and financial institutions has not always been rigorous or wholly successful. Since 2008, global fines for non-compliance with AML, KYC and sanctions regulations have exceeded $36 billion, with $10 billion in 2019 alone. Last year, 12 of the world&rsquo;s top 50 banks were fined for non-compliance. Based on sanctions activity so far this year, that number will increase in 2020.</p> <p>FinCEN recently reported that it is modernizing its AML requirements, which is likely to include updated guidelines for KYC. What will this mean for those working in compliance, and how does this affect the status quo?</p> <h1>KYC Program Components</h1> <p>First, let&rsquo;s examine the three components that comprise an effective KYC program:</p> <ul> <li>Customer Identification Program (CIP)</li> <li>Customer Due Diligence (CDD)</li> <li>Ongoing monitoring</li> </ul> <p>When it comes to CIP and CDD, financial institutions put measures in place during client onboarding to screen who they do business with. This means new customers are screened according to the bank&rsquo;s policies and against watchlists before being allowed to conduct business.</p> <p>Where this KYC process can falter, however, is with the ongoing monitoring (or lack thereof) of customers, especially those who present as high-risk. Because customer profiles can change over time, financial institutions may fail to prevent money laundering or terrorist financing if they do not maintain a process that allows for ongoing or periodic review.</p> <h1>Room for Improvement</h1> <p>A recent report by the Financial Conduct Authority, &ldquo;Financial Crimes Thematic Review,&rdquo; found, &ldquo;Around three-quarters of banks in its sample, including the majority of major banks, were not always managing high-risk customers and Politically Exposed Persons (PEPs) relationships effectively and had to do more to ensure they were not used for money laundering purposes. The FSA identified serious weaknesses in banks&rsquo; systems and controls.&rdquo;</p> <p>In addition to CIP and CDD checks at onboarding, many traditional KYC models review customers at other periods within the relationship. For example, it is not uncommon for many institutions to screen at one-, three- and five-year intervals. Unfortunately, this approach still leaves large swaths of time in which the bank has no insight into or oversight of changes to customer profiles.</p> <p>Given these pitfalls, why haven&#39;t banks and other financial institutions made strides to improve their KYC programs? One reason is that many institutions rely on processes that are heavily manual and are therefore both time-consuming and inefficient. Humans sifting through heavy volumes of paperwork or data searching for inconsistencies or suspicious transactions not only requires huge amounts of time but is also susceptible to human error.</p> <h1>Advantages of AI</h1> <p>Moving to a more automated and AI-based model allows for continuous or dynamic monitoring.</p> <p>Any changes to customer profiles can be highlighted, and alerts can be triggered at any time. If the AI uses machine learning algorithms, it can not only scan huge amounts of structured and unstructured data 24 hours a day, it can also learn and adapt to become more accurate, reducing the number of false positives that require investigation. By learning and mapping new patterns of suspicious behavior, an explainable AI system can help an institution take preventative action and reduce its risk of non-compliance.</p> <p>As McKinsey &amp; Company&rsquo;s &ldquo;Transforming Approaches to AML and Financial Crime Report&rdquo; noted, &ldquo;AI can also ensure that learnings from transaction monitoring or false positives are used to refine initial KYC questions, optimizing not just the KYC process but the full AML value chain.&rdquo;</p> <p>With an AI solution, an institution will gain continuous monitoring, and the quality of the monitoring will improve over time. Further, issues can be addressed as they happen and with the security of 100% compliance. The result is an improved, endless learning process that is automated, yet controllable, and with increasing effectiveness.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/financial-services" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Financial Services</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/kyc-program" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">KYC Program</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/banking" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Banking</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Making the Case for Ongoing KYC: Why the Time for Change is Now - Future of Sourcing" addthis:url="http://futureofsourcing.com/making-the-case-for-ongoing-kyc-why-the-time-for-change-is-now"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 07 Dec 2020 18:40:27 +0000 John O’Neill 1896 at http://futureofsourcing.com http://futureofsourcing.com/making-the-case-for-ongoing-kyc-why-the-time-for-change-is-now#comments Seven Steps to Progressing Artificial Intelligence http://futureofsourcing.com/seven-steps-to-progressing-artificial-intelligence <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Artificial%20Intelligence%20%281%29%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Artificial%20Intelligence%20%281%29%20%281%29.png" title="With the explosive data growth today, increased computer processing power, and strengthened AI technology foundations, the time is now to make AI a competitive advantage for any organization." class="colorbox" rel="gallery-node-1873-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Artificial%20Intelligence%20%281%29%20%281%29.png?itok=nff0LsLS" width="624" height="325" alt="With the explosive data growth today, increased computer processing power, and strengthened AI technology foundations, the time is now to make AI a competitive advantage for any organization." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/from-procurement-police-to-the-chief-partner-officer">From Procurement Police to the Chief Partner Officer</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>Artificial Intelligence and the Pandemic</h1> <p>Artificial Intelligence (AI) defines the 21st century, impacting and driving transformation across every business and industry. With the new norms thrust upon us due to the pandemic, businesses and industries have had to find ways to transform overnight. Previously, it may have taken several years for an organization to make an incremental change or improvement.</p> <p>In 2020, these same organizations had to pivot within days to weeks during the pandemic&#39;s onset to continue staying relevant and in business. These unexpected disruptions forced companies to look to AI to accelerate their migration to digital and experience-based business models.</p> <p>Forward-thinking leaders are adapting to digital and experience-based models sought by their internal and external stakeholders. Organizations are investing in AI adoption to create customized experiences, targeted products, and intelligent business processes. AI cannot be excluded from today&rsquo;s business discussions because it is no longer hype. It is here to stay. For organizations actively investing and incorporating it as part of their business strategy, the rewards are evident.</p> <h1>A Business Perspective on AI</h1> <p>AI offers improved approaches to examining various data sets to optimize plans and processes. These improvements can be used to manage sales, marketing, employees, and systems, to name a few. AI features can provide the premise for a higher automation level to enhance productivity for processes and the workforce.</p> <p>Every use case needs to be properly explored to ensure AI efforts and associated applications achieve their desired business results. Each AI application needs various tools and algorithms to achieve efficiency gains and successfully automate business processes. Automation is the only way an AI application will give you the vital information you depend upon for accurate and timely decision-making.&nbsp;</p> <p>The disruption is real. AI is sweeping across the business world, but the trail is long and winding. As such, the true test for an organization is to quickly devise a strategy for creating value from AI investments and identifying the landmines and risk management strategies.</p> <h1>Stepping Stones to AI Success</h1> <p>First, no general-purpose AI application exists. Each organization&rsquo;s AI journey is different. Choosing the right next-level AI application is a fundamental step towards propelling the organization forward on its AI maturity curve. So, how can we achieve this? These seven stepping stones will enable you to make well-informed plans for AI adoption:</p> <ol> <li><strong>Get Familiar with AI</strong></li> </ol> <p>AI is a continuous process of combining tools, techniques, and domain knowledge to solve business problems and streamline processes to deliver personalized experiences with efficiency and scale. As such, the primary step for progressing AI in a company is to get familiar with it by acquiring the right skills.&nbsp;</p> <p><strong>Briefly, AI is:</strong></p> <ul> <li>The art of applying machines to make intelligent, human-like decisions relying on evidence.</li> <li>Blending decisions with actions and data to automate human tasks and streamline end-to-end processes.&nbsp;</li> <li>Using machines to detect unique human attributes like standard dialects, speech patterns, and pictures.&nbsp;</li> <li>Simulating human insight by analyzing and acting on machine- and application-produced data.</li> </ul> <ol> <li value="2"><strong>Engage With AI Experts</strong></li> </ol> <p>To determine the most effective strategy for using AI in your business, use task analysis. The goal is to ensure that AI will reduce process complexity, minimize time to execute the process, and improve the end-user experience. Consequently, partnering with domain and AI talent is critical to prioritize AI business objectives, investments, and obstacles. The best partners are the ones who have embarked on implementing AI for their functional processes.</p> <p>These partners should be experienced in visioning, project planning, program management, process re-engineering, training, communications, end-user support, adoption monitoring, and ensuring the post-go-live success of AI applications. As a result, they are unmatched in comparison to break through perceived organizational, economic, and technological barriers that threaten to slow down AI progress. Leading companies often seek professional assistance for strategy, program management, and implementation of AI initiatives. All leaders should consider it to ensure a successful outcome.</p> <ol> <li value="3"><strong>Identify What Problems You Want AI to Solve</strong></li> </ol> <p>In addition to the use case, understand what the previous challenges in solving this problem were to grasp the obstacles the organization may have to overcome in using AI.&nbsp;&nbsp;</p> <p>Investigate various ways your organization wants to use AI to improve your overall business. Be open to new thoughts and different approaches to solving long-running problems. AI implementations prompt companies to rethink the rationale for existing processes and see if they still hold relevance when combined with AI.</p> <p>You may discover an AI-led process can eliminate redundant tasks. The key is to rethink the end-to-end process with the user experience in mind, leveraging AI&#39;s capabilities and how it can fit products and services to boost efficiency.&nbsp;</p> <p>The use case should demonstrate business value where AI can help eliminate an existing problem, improve process throughput, or automate service delivery with demonstrable results.</p> <ol> <li value="4"><strong>Build a Business Case to Successfully Deploy AI</strong></li> </ol> <ol style="list-style-type:lower-alpha;"> <li>Think of areas such as predictive maintenance, targeted sales and marketing, logistics optimization, procurement and supply chain personalization, and unified customer service experiences as areas where AI can bring value.</li> <li>Pick the right problems to solve, keeping in mind the AI application&#39;s cost and efforts to the long-term efficiency and competitive advantage it can bring.</li> <li>Bring aboard critical decision-makers in the organization to build a consensus and a shared vision for the long-term role AI technologies will play in the organization.</li> <li>Experiment. Start with a small project to measure AI applicability to a specific use case to deliver results.</li> <li>After an area of focus has been identified, collect data for training the AI algorithm. More data translates to a more accurate AI training model. Consequently, have enough investment available for data gathering efforts from various hotspots to develop a useful AI model.&nbsp;</li> <li>There will also be a need to corroborate that the collected data is not only unbiased but also rich in quality to determine data relevance. AI governance should be considered as a practice to eliminate biases and inefficiencies within the process cycle.&nbsp;</li> </ol> <p>To scale an AI pilot, consider:</p> <ul> <li>Incubating them in innovation labs or AI technology centers of excellence</li> <li>Leveraging the innovation network of technology and consulting partners</li> </ul> <ol> <li value="5"><strong>Evaluate</strong></li> </ol> <p>Once the organization has experimented with a small project, evaluate the outcomes with an objective mindset. What is the feasibility of AI deployment at a broader scale? Can the organization scale AI to add a financial value through improved efficiencies? What is the financial muscle and appetite for change within the organization? Are there enough C-suite champions and investments necessary to accomplish full-blown AI implementations to reap the benefits?</p> <p>Often, the evaluation stage is a tug of war. IT enthusiasts that want to push an AI initiative demonstrating its ability and cutting-edge results may find themselves up against skeptical process owners who are yet to understand how AI works.</p> <p>For this reason, transparency is vital. Equally, it&rsquo;s critical to have business domain experts with C-suite support participate as key stakeholders in the project and governance processes. Functional leaders must feel comfortable about broader AI adoption while understanding successes and flaws to manage the risk.&nbsp;</p> <p>It is AI experts&rsquo; responsibility to explain to business executives the ins and outs of AI. AI activities must be assessed and co-driven by both business and technical leaders to deliver functional, easy-to-deploy winning AI initiatives.</p> <ol> <li value="6"><strong>Gain Employee Trust and Support by Easing Concerns&nbsp; &nbsp;</strong></li> </ol> <p>Research indicates at least 60% of companies speculate most of their workers worry about AI&#39;s impact on potential job cuts, making employees apprehensive about working with new technologies or AI applications. These uncertainties fuel resistance to change and create a significant impediment to AI implementations.</p> <p>Clear this hurdle by involving employees and communicate progress throughout the journey. To ease their concerns:</p> <ul> <li>Provide training and programs to help employees have the data literacy to understand AI dashboards, reports, and analytics. This will increase their comfort level with AI technology.</li> <li>Communicate the positive effect AI will have on the employee and end-user experiences. For example, demonstrate how AI will reduce the mundane and repetitive tasks to free staff up to focus on more high-level activities.</li> </ul> <p>These strategies will grow your workforce&rsquo;s level of confidence with AI. Remember, both employees and AI applications are vital if we want to achieve the intended goals. Neither is dispensable.</p> <ol> <li value="7"><strong>Work With Domain Experts That Understand AI to Prepare Enterprise Data and Skills</strong></li> </ol> <p>Another component of AI is building or having a team of specialists that have domain expertise, understand AI, and are willing to drive the change and adoption. Even so, the biggest challenge facing AI implementations today is the lack of experts with the talent and skills necessary to scale. This explains why we need to continue supporting AI enthusiast domain experts to experiment further and expand AI.</p> <p>Each business will need the relevant data to train and test AI systems. Insufficient or irrelevant data is likely to compromise AI accuracy and relevancy. Accordingly, having the right data and skills within the organization are necessary to fully capture AI&rsquo;s benefits.</p> <p>To progress AI, keep these considerations in mind:</p> <ul> <li><strong>Discover</strong>: Craft the vision for what you want AI to achieve.&nbsp;</li> <li><strong>Devise</strong>: Develop or select the right AI solution to experiment with a small-scale project.</li> <li><strong>Deploy and Sustain</strong>: Broaden the scope of AI for continuous transformation.</li> </ul> <h1>Final Thoughts</h1> <p>When it comes to digital pursuits in enterprises, the next revolutionary frontier is here with AI. While some organizations are still wobbling from previous technological disruptions, a new one is taking shape and will alter how we operate. AI will help improve or replace existing business processes, reduce errors, and broaden the level of automation for better business outcomes. Leading businesses that have already put AI into practice are poised to generate benefits through enhanced relationships, more efficiency, and higher revenues.</p> <p>Given AI&#39;s high capacity to handle and interpret data, the technology offers a range of opportunities to innovate business processes by augmenting their operational frameworks. AI can substantially increase automation, predict business outcomes, revamp customer management, and prevent fraud.&nbsp;</p> <p>With the explosive data growth today, increased computer processing power, and strengthened AI technology foundations, the time is now to make AI a competitive advantage for any organization.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/information-technology-it" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Information Technology (IT)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Seven Steps to Progressing Artificial Intelligence - Future of Sourcing" addthis:url="http://futureofsourcing.com/seven-steps-to-progressing-artificial-intelligence"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 12 Oct 2020 16:02:35 +0000 Purvee Kondal 1873 at http://futureofsourcing.com http://futureofsourcing.com/seven-steps-to-progressing-artificial-intelligence#comments The Case for Changing the Chief Procurement Officer Role http://futureofsourcing.com/the-case-for-changing-the-chief-procurement-officer-role <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Chief%20Procurement%20Officer%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Chief%20Procurement%20Officer%20%281%29.png" title="Within your organization, have an open dialogue to explore how Procurement and the CPO role can evolve. " class="colorbox" rel="gallery-node-1862-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Chief%20Procurement%20Officer%20%281%29.png?itok=MLOsQbWt" width="624" height="325" alt="Within your organization, have an open dialogue to explore how Procurement and the CPO role can evolve. " title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/from-procurement-police-to-the-chief-partner-officer">From Procurement Police to the Chief Partner Officer</a></div><div class="field-item odd"><a href="/guide-your-artificial-intelligence-solution-with-a-proof-of-concept">Guide Your Artificial Intelligence Solution with a Proof of Concept</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1><strong>Procurement Sentiment and Observations</strong></h1> <p>During this pandemic, many organizational CEOs and Board members have become aware of and startled by the inefficiencies and bureaucracies in their Procurement organizations. C-suite executives discovered their organizations were in predicaments with deep and broad implications none of us had previously fathomed. Most of us never imagined we&rsquo;d need to find new suppliers, support, or transition from current ones to diversify for business continuity at the drop of a hat.&nbsp;</p> <p>Frequently, business leaders also found themselves working through Procurement bottlenecks and realized the function wasn&#39;t prepared to respond. Businesses struggled to be reactive at best.</p> <p>Over the years, many Procurement organizations had expanded responsibilities for Supplier or Vendor management. With an overreliance on Procurement to solve critical business problems, inefficiencies were created.</p> <p>Unsurprisingly, this view of Procurement is not new and has been prevalent in organizations for so long, it is practically ingrained. However, with 2020&rsquo;s upheaval, it stung deeper.</p> <p>Neither the business stakeholders nor the supplier community were satisfied with the procurement engagement model or processes.</p> <p>Still dealing with it during the pandemic disruptions, these grumbles reached the ears of the CEO. With this backdrop, those who have been navigating Procurement inefficiencies are hopeful things may finally change.</p> <p>However, they remain fearful this may give rise to more bureaucracies in Procurement. Suppliers and business teams have already encountered more Procurement requirements due to this pandemic, but without thoughtful considerations of how to address the concerns and streamline the process effectively.</p> <h1><strong>The Perceived Value of Procurement</strong></h1> <p>Throughout my career, I have been asked why Procurement exists. What value does Procurement bring? Why is this function so slow and reactive? Why hasn&#39;t Procurement evolved or become more efficient? Those are fair questions.</p> <p>Holding responsibilities for end-to-end Procurement from Procure to Pay, Strategic Sourcing, Risk Management, Vendor Management, and everything in between, I and other talented Procurement professionals have questioned these very same things. Yet, it is difficult to admit the root cause of the problem because it is an inconvenient truth.</p> <p>The trouble lies heavily with the Chief Procurement Officer role, which, by design, is installed with the premise to show less willingness to change the status quo. Some companies have added tools and vastly increased procurement team sizes, with an added scope of responsibilities, over the past decade. These have not reduced the stakeholder grumblings, brought effectiveness, or gained efficiencies for the most part.</p> <h1><strong>How Did We Get Here?</strong></h1> <p>Too often, the business only engages our teams at the last minute to usher the paperwork quickly after their favorite supplier is selected. This behavior makes the Procurement function seem ineffective.</p> <p>You will hear well-justified arguments that CPOs are mere stewards of running processes required by other functions such as Finance, Risk, Legal, or Compliance. You will also catch that while we are not responsible for these processes, we are held accountable. We will also state, and rightfully, that appropriate investments aren&#39;t being made in Procurement for it to evolve as there is no support. So, CPOs have had no choice but to agree to continue the status quo.&nbsp;</p> <p>The business and supplier teams will passionately argue Procurement doesn&#39;t know how to partner. They believe Procurement only cares about the lowest price and lacks business knowledge. They know the function as a mere &quot;checks the box&quot; and don&rsquo;t understand the department&rsquo;s true value. Stakeholders view it as a bureaucracy slowing the business down.</p> <p>Let&#39;s face it&mdash;Procurement hasn&rsquo;t been popular for a long time.</p> <p>Those selected to helm it must be willing to fight the stakeholders with a big bark and an even bigger bite. When you peel the onion back a bit, it&#39;s easy to recognize the Procurement approach of operating without a partnership with the business or supplier community has led to distrust. This explains why the function is hard-pressed to find cheerleaders for it.</p> <h1><strong>Myopic Value of Procurement</strong></h1> <p>Look closer and you will see a dynamic that plays into an opaque behavior of a Procurement leader.</p> <p>Having spent most of my career in these roles, I found that Procurement moving under Finance has been detrimental to the function and reputation. Finance professionals helming Procurement and Vendor Management responsibilities over the past decade have created metrics and knowledge misalignment, leading to further mistrust.</p> <p>When Procurement approaches with a lack of partnership or domain knowledge, it continues to perpetuate the &quot;divide and conquer&quot; sales tactics successfully with the business teams. The approach has increased organizational risks and costs for all sides.&nbsp;</p> <p>The &quot;keeping things status quo&quot; or &quot;bite before they do&quot; approach is something I never felt was right. For the &quot;Finance leader or CPA&quot; installed to oversee Procurement or Vendor management processes, it is a job without passion and typically ends up being either a stepping-stone to their next role or the last one before they retire. Regardless, it has resulted in a myopic mindset of savings, budget management, and compliance.</p> <p>McKinsey &amp; Company&rsquo;s <a href="https://www.sdcexec.com/sourcing-procurement/press-release/21138157/mckinsey-company-do-you-know-what-your-procurement-function-canand-cantdo" target="_blank">Global Procurement Excellence survey</a>&nbsp;reveals the gap between leaders&#39; mindsets and followers&#39; becoming even more pronounced.&nbsp;</p> <p>Procurement, often the lowest priority for functional budget allocation, makes a significant impact on the top and bottom lines of any organization and its reputation. The cost equation to keep in mind is much more than the annual ~1% budget allocation for this function.</p> <p>This &quot;low budget&quot; function mindset has resulted in Procurement lacking visionary leaders willing to evolve it. Procurement teams have become transactional to &quot;pick up pennies from the floor while leaving dollars on the table.&quot; This makes it near impossible to be strategic and gain a seat at the table.&nbsp;</p> <p>Until the Finance procurement overseers are held accountable to different metrics related to automation and value-added delivery through partnership, we will not see Procurement&#39;s transformation. When the reward system and leadership mindset are focused on budget and compliance metrics, value-based deal approaches will be hard-pressed to find. There will be a continued preference for looking at negotiations and deals from a &quot;rear-view mirror.&quot;&nbsp;</p> <h1><strong>Creating Sustainability for the Long-term</strong></h1> <p>I have witnessed Finance procurement overseers push their teams for unreasonable deal structures. Usually, through a talking point, &quot;because we are X,&quot; and &quot;every supplier wants to do business with us&quot; mindset.</p> <p>While it is safe to assume most suppliers want the work, they also need to be profitable and there for us when we need them. If they are deprived of &quot;fair margins,&quot; they won&#39;t be around to assist when needed.</p> <p>The Procurement overseer must be mindful of embracing processes that allow both the Procurement and business teams to quickly ascertain where the risks and fair margins are from market dynamics. Often, suppliers help the organization because of the relationships they have built and not because of the Procurement established processes.</p> <p>Isn&#39;t partnership building what the CPO or any leader should be doing with their stakeholders across all levels, suppliers, and teams? Procurement&rsquo;s function should be partnership building with a &quot;trust but verify&quot; approach to succeed. The lowest price doesn&#39;t necessarily equate to the best quality or the ability to deliver on commitments made by suppliers consistently. The latter two only come through building genuine, well-meaning relationships with streamlined processes that are transparent and benefit both sides fairly and equitably.</p> <p>I have seen wildly successful outcomes on deals when there is an open and joint partnership approach between Procurement, internal business partner, and supplier sales teams. For years, I have advocated the method of asking our suppliers for an &quot;unreasonable number of reasonable things&quot; instead of a reasonable number of unreasonable things. However, these enormously successful outcomes are only possible when all teams involved are open to transparency and embrace leading with trust and partnership.</p> <h1><strong>Reflective Thoughts</strong></h1> <p>If your organization hasn&#39;t had the same challenges with the Procurement function, congratulations! Organizations with forward-thinking and proactive Chief Partner Officers measured on value and automation-based metrics are well ahead of their peers.</p> <p>As a CEO, C-suite, or Board member, if you are ready to transform Procurement, it will be critical to keep partnership, automation, and AI as foundations. It can reduce your costs by 10% - 40% while boosting execution speed.</p> <p>To gauge Procurement engagement and sentiment, I would welcome participation in this&nbsp;<a href="https://www.surveymonkey.com/r/YTL7HJ3" target="_blank">Sourcing Industry Group</a>&nbsp;poll to help advance insights on Procurement transformation opportunities.</p> <p>Within your organization, have an open dialogue to explore how Procurement and the CPO role can evolve. Increasing transparency in the Sales and Procurement cycle are also beneficial for this transformation.</p> <p>If your organization is considering transforming Procurement, I invite you to read Part 2 of this article (forthcoming). Don&#39;t hesitate to reach out if your organization is looking for ideas on how you can transform the end-to-end Procurement process value chain.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/sustainability" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sustainability</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/chief-procurement-officer-cpo" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Chief Procurement Officer (CPO)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procure-to-pay-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procure to Pay</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/strategic-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategic Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/vendor-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vendor Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="The Case for Changing the Chief Procurement Officer Role - Future of Sourcing" addthis:url="http://futureofsourcing.com/the-case-for-changing-the-chief-procurement-officer-role"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 30 Sep 2020 16:19:41 +0000 Purvee Kondal 1862 at http://futureofsourcing.com http://futureofsourcing.com/the-case-for-changing-the-chief-procurement-officer-role#comments 5 Activities to Accelerate Post-COVID Sourcing Strategies http://futureofsourcing.com/5-activities-to-accelerate-post-covid-sourcing-strategies <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Covid-19%20sourcing%20strategy.jpg"><a href="http://futureofsourcing.com/sites/default/files/articles/Covid-19%20sourcing%20strategy.jpg" title="There are five activities that accelerate quick results - creating new capabilities, greater efficiencies, cost savings, and increased resiliency. " class="colorbox" rel="gallery-node-1856-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Covid-19%20sourcing%20strategy.jpg?itok=JDF05df_" width="1024" height="576" alt="There are five activities that accelerate quick results - creating new capabilities, greater efficiencies, cost savings, and increased resiliency. " title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/rethinking-the-future-for-resilient-sourcing-and-beyond">Rethinking the Future for Resilient Sourcing and Beyond</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p align="left">When the COVID crisis hit, organizations had no choice but to respond to the challenges they faced by leveraging the resources they and their suppliers had at their disposal. Clearly, some were better prepared and responded with more resilience than others. Now we are many months into the crisis, and it&#39;s time to look at what went wrong and what organizations should change going forward.&nbsp;&nbsp;</p> <p align="left">The good news is that there are five activities that accelerate quick results - creating new capabilities, greater efficiencies, cost savings, and increased resiliency.&nbsp;</p> <h1>Benchmark Your Costs to Know the Market and Realize Savings</h1> <p align="left">Supply and demand dynamics have drastically changed. As businesses have been negatively impacted and economies have been challenged, we &nbsp;see a willingness by suppliers to renegotiate existing relationships. Many suppliers are willing to offer lower rates and enhanced capabilities to shore and improve their business and engagement with customers. But first, organizations need to consider that COVID-19 has fundamentally changed the cost structure.&nbsp;</p> <p align="left">Globally, suppliers are leveraging work from home models, while most countries are experiencing unprecedented levels of high unemployment and reductions in GDP. Without a benchmark against current market rates, you won&#39;t have a clear understanding of today&#39;s new rate structure and could miss a significant portion of your cost savings opportunity.&nbsp; &nbsp;</p> <h1>Leverage Automation and Digitization to Realize New Capabilities, Greater Efficiencies and Improved Resiliency</h1> <p align="left">There&#39;s been tremendous advancement in the number of new automation solutions, from simple robotic process automation to more advanced machine learning and artificial intelligence. Today, there is a continual emergence of new vendors, services, methods, tools, innovative platforms and digital technologies. Increasing portions of your business can leverage automation to produce more consistent services at lower prices with increased resilience.</p> <p align="left">If your current engagements don&rsquo;t significantly leverage RPA, ML, and AI, therein lies a significant opportunity to improve your customer engagement, reduce operating costs, boost revenues, and improve profitability. Technology savvy process management experts can identify the opportunities within your organization for automation and identify the right technologies to transform these business processes.</p> <p align="left">When the dust settled, it was clear that organizations who were significantly digital (cloud-based) handled the remote working challenges of COVID-19 more resiliently than those who were not. Organizations that had intranet restrictions on applications access and dedicated data centers faced substantial challenges with scalability, employees getting access and being able to work. Additionally, organizations also experienced issues handling the digital demand and had to limit employees&#39; access. As organizations consider the savings in terms of office space and employee commute time, work from home may be around long after the pandemic has ended. The success of digital operations and digital client engagement during the COVID crisis has clearly demonstrated the resiliency of this model.&nbsp; &nbsp;</p> <h1>Offboard Suppliers and Revise Your Location Strategy to Reduce Risk</h1> <p align="left" style="margin-left:.5pt;">As COVID-19 has shown, some suppliers were better prepared and more resilient in their response. Many suppliers did not fare well in their operational response and as a result, their clients&rsquo; operation suffered.&nbsp; For those that did not respond well, inadequacies in their risk management and capabilities were highlighted.</p> <p align="left" style="margin-left:.5pt;">Organizations need to evaluate which suppliers pose the greatest risks as we advance. Companies should consider transitioning work to alternate suppliers and offboarding those suppliers who are not a good fit for your organization&#39;s overall risk appetite.&nbsp;</p> <p align="left">Inherent deficiencies, including poor technology infrastructure, ineffective government, and legal restrictions, caused many locations to respond poorly to COVID.Client operations experienced disruptions as a result.</p> <p align="left">Based on these experiences, organizations should determine if they need to make changes to their location strategy.&nbsp; Additionally, when evaluating location strategy, organizations should be careful not to increase concentration risk.&nbsp;</p> <h1>Consider Selective Insourcing to Increase Resiliency</h1> <p align="left">It&#39;s fair to say that sourcing strategy played a significant role in how well organizations responded to COVID-19. A challenge many experienced &nbsp;was accessing key resources or capabilities like subject matter experts and project managers that they no longer retained inhouse.&nbsp; Often because of location limitations, organizations experienced limited access to these key positions now on the supplier side.&nbsp;</p> <p align="left">Just as governments are considering what manufacturing is critical and needs to be re-shored, corporations should also consider what is core and needs to be brought back inhouse. Functions and roles that are business-critical, have IP and/or security concerns, require agile development or offer competitive advantage, should be considered as possible insourcing opportunities.</p> <h1>Invest in Continuous Risk Monitoring as a Competitive Advantage</h1> <p align="left">Risk management should no longer be viewed as a cost, but instead as a competitive advantage. Effective risk management enables not only the avoidance of costly disruptions, but &nbsp;also the preservation or even enhancement of revenue, and more resilient recoveries than your competitors.&nbsp; To realize these competitive advantages, organizations must make two changes to their risk management programs.</p> <p align="left">Firstly, they need to transition away from reactionary risk programs that rely heavily on periodic assessments and move to continuous risk monitoring. Today, most TPRM programs are reactionary and rely heavily on stale, point-in-time data for decision making. &nbsp;But resiliency in our rapidly evolving risk landscape requires the real-time risk intelligence that continuous monitoring provides.</p> <p align="left">Secondly, risk programs must view risk through a much broader risk aperture. A myopic third-party risk focus on cyber and financial is inadequate and leaves organizations vulnerable and unaware of significant third-party and&nbsp;location-based risks.&nbsp;Take, for example, location-based events, including disease outbreaks, severe weather, and social unrest. These events have recently proven to be extremely disruptive and have been rising in both frequency and severity.&nbsp;&nbsp;</p> <p align="left">Now is the opportune time to think beyond band-aids and leverage one or more of these five accelerators. Organizations that do so will rapidly realize results from new capabilities, greater efficiencies, cost savings and improved resiliency going forward.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/tprm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">TPRM</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">rpa</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/ml" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">ML</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">AI</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/digitization" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digitization</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-intelligence" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Intelligence</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="5 Activities to Accelerate Post-COVID Sourcing Strategies - Future of Sourcing" addthis:url="http://futureofsourcing.com/5-activities-to-accelerate-post-covid-sourcing-strategies"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 17 Sep 2020 22:21:47 +0000 Atul Vashistha 1856 at http://futureofsourcing.com http://futureofsourcing.com/5-activities-to-accelerate-post-covid-sourcing-strategies#comments What Will Customer Service Outsourcing Look Like in the New Normal? http://futureofsourcing.com/what-will-customer-service-outsourcing-look-like-in-the-new-normal <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Business%20Outsourcing%20%20%281%29.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Business%20Outsourcing%20%20%281%29.png" title="Business Outsourcing" class="colorbox" rel="gallery-node-1816-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Business%20Outsourcing%20%20%281%29.png?itok=TlB2uEaM" width="624" height="325" alt="Business Outsourcing" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/strategies-to-drive-procurement-compliance-and-manage-rogue-spend">Strategies to Drive Procurement Compliance and Manage Rogue Spend</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Amid the pandemic, it&rsquo;s fair to say the outsourced service operating model, particularly in customer service, has experienced forced change. While cost has always been the key driver in services outsourcing, Covid-19 has caused a monumental shift from cost being the critical point, to risk management and quality as the metrics and measures that now matter most. Call centers have had a particularly tough time of things; the actions that many of them have taken have been admirable, but it&rsquo;s becoming clearer that long-term change has accelerated to the short term.</p> <p>As businesses begin to ramp up again, companies will be reviewing what has worked and what has not. Now is the time for BPO&rsquo;s to show that they are capable of shifting to new capabilities to help facilitate the &lsquo;new normal&rsquo; and to look at providing a very different service operating model &ndash; one that maintains performance levels at its very heart.</p> <h1>Flexibility and Business Continuity are Re-defined</h1> <p>During Covid-19, a remarkable number of customer service teams were able to cope, but it&rsquo;s fair to say that it wasn&rsquo;t always an easy or comfortable effort. Many models relied on superhero efforts from customer service staff, with people working overtime and losing sleep to make sure service was not disrupted. As companies start to plan for a return, they are reviewing what they need from their delivery models, and now is the time for BPO&rsquo;s to sit up and take notice if they are to stay in the game.</p> <p>Business continuity planning has been challenged to the core, and senior decision-makers will also be looking to eliminate processes that aren&rsquo;t working. Customer service agents themselves have new expectations: the pandemic has forced flexibility in the form of remote working onto many businesses, and the world of outsourcing has to evolve to embrace this necessity. Gone are the days where people will be willing to be crammed into call centers five days a week to facilitate a company&rsquo;s customer service. At the same time, those running any form of the remote working model need to be fully prepared. Isolation, loneliness and lack of motivation can all be part of a cultural cost that businesses will face without putting in place the proper infrastructure to support their remote teams.</p> <p>However, what many BPOs are realizing is that the issue of flexibility isn&rsquo;t just about location: it&rsquo;s about having a multichannel customer service environment mapped to specific query types and customer segments. Automation has, for many years, played a significant role here. It has been clear that organizations that were proactive in their response to coronavirus tended to have higher levels of automation running throughout the company or had fast-tracked their technological innovation to cope with it. Virtual assistants and chatbots were, in many cases, the saving grace for companies that raced against time to get their customer service agents up and running during lockdown.</p> <p>However, while automation may help to ease accelerated volumes and route out simple queries that need not be directed to human customer service agents, it&rsquo;s not enough to help with some of the other issues raised by the pandemic. Outsourcers were quick to realize the difficulties introduced by illness among customer service agents, the challenges of childcare amongst employees and the accelerated demands that have been placed on customer service teams due to increased demand for services during the pandemic.</p> <p>Automation is also not a replacement for empathy, which has become paramount in a world that has experienced lockdown and a distinct lack of human contact. During lockdown, in our discussions with customer service agents, we heard time and time again that what many customers wanted was not just a solution to their problem, but also assurance from another human being that business would continue as usual. Automation rolled out carelessly can just become a landing place for customers, not a solution to their problems.</p> <p>It&rsquo;s clear that what is needed is a truly flexible workforce that can work where and when required, but one that is completely capable of empathy.</p> <p>This is where the gig economy can work. Those taking on crowdsourced gig customer service tasks can operate where and when they want to, with the nature of gig naturally flexing to meet the scaled demand of queries we have seen during coronavirus. It&rsquo;s called &lsquo;GigCX&rsquo;, and the technology platforms that route queries to gig crowds are available to make this a realistic and viable part of customer service operations. As Suzi Caesar, Global Director of Customer Experience at Sage, says: &ldquo;it&rsquo;s no longer about bringing the people to the work: it&rsquo;s about bringing the work to the people.&rdquo;</p> <p>We&rsquo;re likely to see the introduction of more GigCX into new service operating models, alongside traditional call center staff, virtual assistants and chatbots.</p> <h1>Innovate and Future-proof</h1> <p>There is no denying that many organizations&rsquo; outsourcing models could do with a variety of amendments and improvements. As lockdown eases, we can begin to evaluate where growth needs to take place, where our attention should be focused and what the future of outsourcing will look like. Any bypassing of red tape needs to be reviewed too - to ensure that short term changes (in areas like data security), forced by the pandemic, don&rsquo;t become long term costs.</p> <p>We know now that de-risking the outsourced customer service model is a top priority. To do this, organizations ultimately need to be looking at how they can make the nature of their outsourcing more flexible, taking into account automation, but also innovation in the form of new channels such as GigCX.</p> <p>To further eliminate risk, businesses should be looking to future-proof every channel, be that full-time call center staff, chatbots, virtual assistants or the GigCX crowd. The gig crowd is, for example, completely capable of answering increasingly sophisticated queries as experts become more trained and can even move up to a pre-sales capacity. Chatbots and virtual assistants are also getting smarter, which leaves humans to take care of the empathy that is so needed right now.&nbsp;</p> <p>We also need to aim high in the future. There is absolutely room for outsourcing in the new CX service operating model. Still, it depends entirely on the ability for outsourcers to adapt in the new environment, and for businesses to choose the best partner that will help them to reduce risk and prioritize quality simultaneously.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outsourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/business-continuity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Continuity</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/bpo" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">BPO</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/human-resources" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Human Resources</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="What Will Customer Service Outsourcing Look Like in the New Normal? - Future of Sourcing" addthis:url="http://futureofsourcing.com/what-will-customer-service-outsourcing-look-like-in-the-new-normal"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 09 Jul 2020 22:29:01 +0000 Roger Beadle 1816 at http://futureofsourcing.com http://futureofsourcing.com/what-will-customer-service-outsourcing-look-like-in-the-new-normal#comments Rethinking the Future for Resilient Sourcing and Beyond http://futureofsourcing.com/rethinking-the-future-for-resilient-sourcing-and-beyond <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="http://futureofsourcing.com/sites/default/files/articles/Future%20for%20Resilient%20Sourcing%20.png"><a href="http://futureofsourcing.com/sites/default/files/articles/Future%20for%20Resilient%20Sourcing%20.png" title="Future of Resilient Sourcing " class="colorbox" rel="gallery-node-1802-qqNP0UZebrY"><img typeof="foaf:Image" src="http://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Future%20for%20Resilient%20Sourcing%20.png?itok=vZ0NgLuq" width="624" height="325" alt="Future of Resilient Sourcing " title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/securing-remote-workforces-payments-and-customer-data-in-a-rapidly-evolving-world">Securing Remote Workforces, Payments and Customer Data in a Rapidly Evolving World </a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>While the COVID-19 pandemic is far from over, enterprises are looking beyond the current crisis with the hope of pandemic-proofing their supply chains and operations to build resiliency. But that view is too limited to build true resiliency. The next global business disruption crisis might be a pandemic, but it might also be something entirely different or so novel it&#39;s never been considered. Today&#39;s resilient enterprises need to embrace a mindset shift to view risk through a much wider lens. Those on the leading edge will embed this new risk mindset across all business functions, including sourcing and procurement.</p> <h1>The Need for Real-Time Risk Intelligence</h1> <p>In today&#39;s rapidly changing business environment, resilient enterprises require real-time intelligence. Point-in-time data is merely inadequate. Take, for example, the current COVID crisis. Relying on stale data from last year, last quarter or even last month is virtually worthless or even counterproductive when making sourcing or risk mitigation decisions today. The situation is evolving too quickly. Today&#39;s world simply moves too fast to make effective decisions based on stale point-in-time data.&nbsp;</p> <p>Traditionally, sourcing and procurement have been forced to rely on point-in-time data for decision making during the entire sourcing lifecycle. Every step from identifying the possible universe of suppliers, through narrowing down the alternatives, due diligence, supplier selection, contracting, onboarding and ongoing governance, could benefit significantly from real-time intelligence.&nbsp;</p> <p>Enterprises must recognize that in order to be reliable, intelligence needs to be not just real-time but also independent. Relying on data provided by the supplier or even an external source with questionable independence does not support resilient decision making. &nbsp;&nbsp;</p> <p>Independent, real-time intelligence enables a comparison of a supplier&rsquo;s current capabilities and limitations. It enables sourcing and procurement to understand the current state of a supplier&#39;s inherent risk profile. Areas that need to be addressed during the contract process or as part of the service level agreements, will be uncovered with real-time intelligence. &nbsp;&nbsp;</p> <p>COVID has made clear that the degree to which a supplier is able to manage risk has clear benefits for an enterprise&#39;s supply chain and continuity of operations.&nbsp; A supplier&#39;s risk management capabilities should be a selection criterion that is considered during the due diligence and selection process.&nbsp; Real-time risk intelligence enables comparison of this competitive differentiator across suppliers.</p> <h1>Looking Beyond Financial and Cyber</h1> <p>The supplier selection process traditionally has been very limited to considering only financial and cyber risks. Our current and future risk landscape requires looking at a much broader view of risk. Sourcing and procurement should consider a supplier&#39;s ability to manage all risks of disruption not only from financial vulnerabilities and cyber susceptibility. COVID has highlighted many supplier vulnerabilities including people risks from absenteeism and attrition; client risks due to lost revenue; solutions maturity risks due to underfunding as a result of financial pressures; governance, regulatory and compliance risks due to changes in government regulations and possible legal action; and a myriad of location-based risks.&nbsp;</p> <p>The vast majority of supplier due diligence fails to consider how the external environment could affect the supplier&#39;s ability to meet contractual obligations. According to the<a href="https://www.weforum.org/reports/the-global-risks-report-2020" target="_blank">&nbsp;2020 World Economic Forum Global Risks Report</a><u>,</u> in terms of likelihood and impact, leaders should be concerned with disruptions due to natural and environmental disasters, extreme weather, climate action failure, global governance failure, information infrastructure breakdown and as well as disease outbreaks. &nbsp;These location-based risks represent a significant part of an enterprise&#39;s risk landscape.&nbsp;</p> <p>Take, for example, a technology services supplier located in Guadalajara, Mexico. In the past, due diligence would most likely include a review of their financial statements and cyber susceptibility, but an actual risk evaluation needs to include the risks that occur in the location from where the services will be provided. The service provider in Guadalajara would be vulnerable to different risks of disruption than a similarly qualified supplier in Bangalore, India, due to location-based risks. A comprehensive due diligence risk framework should include political, natural disaster, extreme weather, epidemic, legal, financial, scalability, macro-economic, infrastructure, business and quality of life risks.</p> <p>To illustrate the importance of location intelligence, let&#39;s look at our current COVID-19 crisis. As with all disease epidemics, it started as a location-based risk. In this case, in Wuhan, China, before it spread from location to location around the world. The effects of this pandemic have varied widely in different areas due to local infection rates, local healthcare infrastructure, local government policies and restrictions to control the spread of the pandemic.&nbsp; In this crisis, the facts applicable to a supplier in one location have had little bearing on a similar supplier&rsquo;s ability to operate in a different location, sometimes even within the same country.&nbsp;</p> <h1>On-Going Proactive Risk Management</h1> <p>It&#39;s pretty clear that resiliency in the face of rapidly developing risk scenarios requires real-time risk intelligence. Long gone are the days when not much happens between periodic assessments.&nbsp; Today, events that at first seem insignificant can quickly morph into serious disruption risks before your next assessment is due.&nbsp; The current ever-evolving, rapidly changing risk environment requires continuous monitoring.</p> <p>As we&#39;ve experienced during this pandemic, suppliers risk profiles have been consistently in flux as facts, policies and the cascading effects change from day-to-day. It&rsquo;s critical that suppliers are monitored continuously. Continuously monitoring suppliers across a broad risk framework provides the critically important real-time risk intelligence resilient enterprises need to stay on top of their suppliers changing risk profiles.</p> <p>As a reaction to COVID-19, enterprises are looking to build resiliency and disruption-proof their supply chains and operations. The problem is no one knows what form the next global business disruption will take, but there is a solution. Enterprises need to integrate a proactive, continuous risk monitoring approach across the entire sourcing lifecycle. Continuously monitoring a broad view of all the supplier and location risks discussed here will provide enterprises with the real-time intelligence and early warning required to ensure resiliency whatever comes next.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/cyber-risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cyber Risk</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Risk</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-intelligence" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Intelligence</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/coronavirus" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">coronavirus</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Rethinking the Future for Resilient Sourcing and Beyond - Future of Sourcing" addthis:url="http://futureofsourcing.com/rethinking-the-future-for-resilient-sourcing-and-beyond"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 29 Jun 2020 16:52:14 +0000 Atul Vashistha 1802 at http://futureofsourcing.com http://futureofsourcing.com/rethinking-the-future-for-resilient-sourcing-and-beyond#comments