Enhanced supplier due diligence - the implications for sourcing and supplier risk mangement

Ted Datta Channel Director – Risk Solutions

BvD UK & Ireland

Enhanced Supplier Due Diligence

The implications for sourcing and supplier risk management

‘It takes 20 years to build a reputation and five minutes to

ruin it. If you think about that, you'll do things differently.’

-Warren Buffett

Why now?

Global data and supplier risk models

A recent case study

UK Government: Corporate Transparency

http://www.supplymanagement.com/news/2015/uk-government-spending-could-be-battering-ram-for-greater-corporate-transparency

European Union: Anti-Money Laundering

http://www.pwc.lu/en/anti-money-laundering/publication-of-the-4-th-aml-directive.html

Modern Slavery: Know Your Suppliers

https://www.gov.uk/government/news/pm-seeks-stronger-co-operation-with-vietnam-to-stop-modern-slavery-as-new-measures-come-into-force

http://www.theguardian.com/world/2015/aug/10/lithuanian-migrants-chicken-catchers-trafficked-uk-egg-farms-sue-worst-gangmaster-ever

Routine Pre-Qualification?

Enhanced Due Diligence

.

Source: Orbis report 12/08/15http://www.bbc.co.uk/news/world-europe-26672800

Harmonising global market intelligence

How global is Global?

Bureau van Dijk: Global Corporate Coverage (2015)*

*Source: Orbis global coverage 10/08/15

What about emerging markets?

2010 2011 2012 2013 2014 20150

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2010 2011 2012 2013 2014 20150

2000000

4000000

6000000

8000000

10000000

12000000

14000000

2010 2011 2012 2013 2014 20150

200000

400000

600000

800000

1000000

1200000

1400000

2010 2011 2012 2013 2014 20150

500000

1000000

1500000

2000000

2500000

3000000

>18.5 million companies* >12.5 million companies*

>1.2 million companies* >2.6 million companies*

*Source: Orbis global coverage 10/08/15

Market

Intelligence

Supplier Risk Profile

Introducing supplier risk models....

Adverse Media

Sector

Business Age

Owners & Directors

Country Risk &

Sanctions

FinancialStrength

De-risking a global supply chain against the clock

Recent Case Study – Large Global Corporate

Background

Strong brand, multi-national, manufacturer and retailer

70 countries world-wide, reliance on emerging markets

“What is a Sanction?”

Banking license, new covenants: Supplier Sanctions Checks

The Catalyst

Who was involved?

Many stakeholders – HR, Treasury, Legal, Finance, Compliance

....buck stops with Procurement!

First Steps

Supplier information audit – who? where? what? when?

Data matching exercise

Model Development and Application

Is it fit for purpose... “risk based approach”

Outcome

Simple, scalable, supplier risk model

What’s next...?

...blend Internal Data with the model:

- contract value

- sole sourced vs. dual sourced

- contract lifespan

- consequences of failure

Three Key Takeaways

Increasing regulatory pressure to Know Your Suppliers

Availability of global data is improving in key markets

Get set for a collaborative approach!