Smart Sourcing Summit: Supply risk is always present, says D&B expert
Dun & Bradstreet's Lawton says volatility in all forms is increasing
Tom Stundza -- Purchasing, 10/13/2009 3:45:05 PM
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"There's no need for supply risk evangelism anymore," says Jim Lawton, vice president and general manager of the supply management solutions division at, Dun & Bradstreet. "We all get it since supplier bankruptcies continue to make the headlines," he told attendees at the Smart Sourcing Summit presented by Purchasing magazine.
Between March 2008 and February 2009, alone there were more than 5,700 business failures in manufacturing. As the recession dragged on into late summer, "a significant turnaround in manufacturing is unlikely in 2009." Yet, he adds, "volatility of all forms --demand, commodity prices and supply, currency evaluations--is increasing."
In reality, supply risk is capturing the attention of company executives, procurement leaders and shareholders, Lawton says. "It's no longer just a procurement or supply chain issue," he says, "in an increasing number of companies, finance organizations are lending both financial and resource support to tackle the risk challenge." He explains that "companies are beginning to understand the seven, eight and even nine-figure impacts that supply disruptions can have."
Unfortunately, it's not just executives getting on the risk management-bandwagon, he says, "since there are many more trying to hitch a ride on the gravy train." He cautions buyers at the conference that "every so-called expert seems to have a point of view on risk; everyone-from procurement vendors to ERP companies-is pushing some kind of solution. He also says that "too many ‘consultants' are talking about risk like they've examined supply risk management throughout their entire careers" when all they are doing is marketing snake oil.
"Snake oil is particularly dangerous in the case of supply risk," Lawton says, because it is grounded in faulty logic or can drive companies to focus on the wrong underlying issues. Atop that, "there is no such thing as the placebo effect when it comes to targeting company risk," he adds, saying: "You either address it with the right set of tools and information or you don't."
Lawton says that "effective supply risk management requires both cultural and business process shifts." That because "it also changes the way an organization manages its entire supplier lifecycle - from up-front qualification to sourcing to supplier development."
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