Updating Risk Management for the 21st Century: One CPO’s Approach
by Nick Heinzmann, September 12, 2017 6:00 AM
As chief procurement officer at Wilbur Curtis, Wilson intimately knew the ups and downs of managing a global supply chain. But when it came to risk, the Montebello, California-based manufacturer saw him as the point man — and that was it.
“Up until recently, their plan for risk was, ‘Don’t worry, Ron will take care of it,’” Wilson said in a recent Q&A with MetalMiner. “And that puts a lot of pressure on you.”
The aftermath of the Great Recession made that impossible. Volatile commodity prices wreaked havoc on his buying strategies. Procurement would call up longtime suppliers to place an order only to learn they had suddenly gone out of business. Add in an unexpected port strike and it all quickly become too much for Wilson to handle on his own.
He and the rest of the C-suite were in agreement: a DIY, manual approach to managing supply chain risk would no longer cut it. To meet the challenges of the post-2008 world, Wilbur Curtis would need a modern technology solution that could not only monitor, predict and mitigate their risks, but restore their peace of mind.
That’s not to say Wilbur Curtis was new to risk management. Established in 1941, the manufacturer of commercial coffee brewing equipment and specialty beverage dispensers prides itself on a conservative business culture.
“We like to have multiple backup plans,” Wilson said. “Wilbur Curtis is a conservative company, so they like to make sure that we never have any down time, that we’re always satisfying the customer.
“That can be anything from having multiple approved suppliers or having suppliers in different geographical locations, just in case you have weather issues,” he continued, or something as simple as using different types of materials, such as buying 201 stainless steel in addition to or in place of 304 stainless.
For the most part, this approach had worked for Wilbur Curtis. While the company experienced supply disruptions from time to time like any business, Wilson could mostly handle any unforeseen issues on his own, manually looking up news or supplier information he needed to mitigate a risk event.
The chaos left in the wake of the 2008 financial crisis, however, changed that. Established relationships with “mom and pop” suppliers as old as Wilbur Curtis itself became precarious, and the old time frames for sales and operations planning became a luxurious memory.
“In the old days, five years was a nice, long period, and everything was great,” Wilson said. “But ever since this Great Recession, five years seems like just yesterday.”
For the first several years of the recession, Wilson continued managing risk much the way he had in the past, while also researching more on topics such as supplier insolvency to better prepare for the changing business environment. But as he took on more and more responsibility for different potential risks, Wilson found himself faced with information overload.
Between monitoring disparate online data sources, trade publications and his own historical information, Wilson and his team felt like they were just running around instead of focusing on more strategic priorities.
And even when he could find the information he needed, the data was rarely real time, meaning its value as actionable intelligence was limited — that is, if the data was even accurate in the first place. Often Wilson would find his multiple data sources conflicted with one another, meaning he would have to discern what was trustworthy. His huge time investment risked becoming a complete waste should he make a decision based on inaccurate intelligence.
“After looking at all that, I realized that I just cannot mine even a fraction of all of this data,” he said. “And then if I did, how do I filter it all through something to make it something I can use?”
Even with the worst of the recession behind him, Wilson realized he could no longer manually manage all of his company’s supply chain risk. Wilbur Curtis needed a new solution.
After attending multiple industry events and webinars, Wilbur Curtis ultimately decided to partner with riskmethods, a Munich-based provider of supply chain risk management software, to automate its approach.
Through artificial intelligence-based web monitoring of all of the data sources he needed to keep track of, Wilson used riskmethods to gather and filter all of his risk-related information for planning his supply chain in real time. This helped him and his team eliminate untold hours of manual labor, instead receiving notifications set to their preferred frequency and level of urgency when a risk (e.g., an impending supplier bankruptcy) arose.
Beyond giving him the information he needed when he needed it, riskmethods also allowed Wilson to access new data he couldn’t even find with his old approach. While before he could only look up sketchy data on his most immediate suppliers, riskmethods offered the ability to drill down into the second and third tiers of his supply chain as well, helping him tackle emerging risks before they affected his tier 1 relationships.
The return on investment from these new capabilities quickly became apparent. One early example was how riskmethods increased Wilbur Curtis’ awareness of how weather events could unexpectedly affect its international supply chain.
When Wilson received an alert that a typhoon was projected to hit one of his suppliers in Taiwan, he perked up. He knew he had an important shipment pending from the manufacturer, and based on the alerts he was seeing, the storm was only getting more dangerous.
Knowing this, he worked with the supplier to speed up delivery and got the items out of the country before the storm hit. And he was glad he did: the typhoon ultimately crippled a large amount of the area where the supplier was located.
That was a big win for Wilson, who had only recently implemented riskmethods. But he also said the most noticeable ROI for him and his management team was a return to a feeling of being protected from risk. Riskmethods gave them back peace of mind.
“The information from riskmethods affects everyone at the company,” Wilson said. “There’s no one function that doesn’t have a vested interest in this software in one way or another.”
Want to learn more about Wilbur Curtis’ ROI from implementing riskmethods? Watch our recent webinar, featuring a Q&A with Chief Procurement Officer Ron Wilson.