“Responsibility for and awareness of the importance of risk management are crucial.”


the summer. We signed three of our five largest contracts in the space of a few weeks, and then the partnership with Transporeon followed in September.” Scalability was not an issue. “We invested in a scalable technology at an early stage. In fact, before the pandemic broke out we had already demonstrated our ability to serve large international companies – clients such as Nestlé, Coca-Cola and Saint Gobain. One advan- tage is that our platform gives customers a lot of autonomy, plus – thanks to our partnership with Transporeon – we have a call centre where they speak 25 lan- guages.”


Riskmethods has seen the number of new customers treble. “Virtually over- night! That puts a big strain on our organization, because customers still expect quality. But we’ve had an aver- age annual growth rate of 40% for years, which has made it a bit easier to cope with the peak in demand. We know what it takes to scale up. The biggest prob- lem – especially for cloud companies with a typical revenue model based on staggered payments – is that scaling up requires capital. But fortunately, we had no shortage of that.” The advantage for start-ups is that they can respond quickly to crisis situations, as Sixfold and Prewave have shown with their dashboards and maps. “In the cur- rent coronavirus crisis, we’re now seeing a gradual shift from waves of infection to waves of bankruptcy so we’re working on a solution to predict them more accu- rately,” states Nitschinger. Riskmethods is continuing to innovate too. “In par- ticular, there are opportunities upstream in the chain beyond the first-tier suppli- ers. That’s where half of the disruptions occur, but it takes a lot of effort to get that kind of visibility. Besides that, you need strong arguments and incentives to persuade first-tier suppliers to provide insight into their own networks. Tech- nology can help.”


Making risk management easier


Huth and Knauer agree that today’s IT solutions can support supply chain risk management maturity. “It is now much easier to visualize, locate and analyse risks, of course. There is a lot more –


is made responsible for it, nothing will happen. It helps if processes, procedures and systems are in place, but responsibil- ity for and awareness of the importance of risk management are crucial,” adds Huth. He illustrates this with an exam- ple of his own, when he was involved in setting up supply chain risk manage- ment within a company in 2017. “At the start, everyone was enthusiastic at


all


levels of the organization, from top to bottom. They all saw the need and the relevance. In the first year, we identified 50 risks and addressed three of them. But then the project ground to a halt. Top management stopped asking for risk analysis, and when that happens there are almost always some operational issues that seem to be more important.”


Mandate


Heiko Schwarz from Riskmethods agrees that top management plays a cru- cial role. “It’s relatively easy these days to run a software system to identify risks, but in addition to that you need a man- date from the senior management to spend money on reducing those risks. Without that mandate, it remains a mat- ter of looking at risks instead of tackling them... and that serves no purpose what- soever. In that case, technology has zero added value.”


and better – data available than five or ten years ago. This, combined with artifi- cial intelligence, provides great opportu- nities. Companies now have the tools to make the entire chain transparent. That makes supply chain risk management much easier,” says Huth. However, they both caution against focusing too heavily on IT solutions right away. “Such systems can be overwhelm- ing, particularly if the maturity level is not yet high. But if companies already have some experience with supply chain risk management and understand how much impact risks can have on the sup- ply chain, they will be more inclined to use IT solutions,” explains Huth. A structural approach starts with giving supply chain risk management a place in the organization. “As long as nobody


Another focus point concerns conflict- ing goals and incentives, such as buyers who are told to stay alert to supplier risks but are evaluated based on cost savings, explains Schwarz: “Sometimes, it may be wiser to go with a supplier that is slightly more expensive, but has fewer risks and therefore lower costs in the long run. Last but not least, supply chain risk management must be a cross-functional activity. It doesn’t matter whether Sup- ply Chain, Purchasing or someone else is ultimately responsible; once a risk has been identified, the actions of the vari- ous disciplines must be coordinated. It doesn’t help if you have to keep explain- ing to everyone why risk management is important.” Summing up, Knauer encourages com- panies to just get started. “That’s more important than an effective system. Even if you only conduct risk analysis once a year, it’s better than nothing.”


41


SUPPLY CHAIN MOVEMENT, No.40, Q1 2021


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