Revolutionizing Pharma Supply Chains: Navigating Risks and Embracing Digitalization for a Resilient Future

by Michelle Armstrong, TYS Global VP of Value Solutions Consultant

Abstract 

The pharmaceutical supply chain is grappling with significant issues of medicine shortages. This study adopts a risk management approach to identify key risk factors affecting the pharmaceutical supply chain, using the Malaysian pharmaceutical industry as a case study.

The research utilizes Fuzzy Failure Mode and Effect Analysis and Data Envelopment Analysis for risk assessment. The study finds the pharmacy node as the riskiest, with unexpected demand and scarcity of specialty drugs as major risk factors. To mitigate these risks, the study advocates the use of digital technologies like big data analytics and blockchain. 

Introduction
Medicine shortages in the pharmaceutical industry pose serious challenges, impacting health outcomes and the broader healthcare system. These shortages lead to increased healthcare costs due to the use of alternative medications and managing patient health complications. The study aims to understand the root causes of these shortages and how digital technology can address them, ushering in the Pharma 4.0 era. 

Pharmaceutical Supply Chain and Risk Factors
The pharmaceutical supply chain (PSC) is intricate, involving multiple stakeholders and extending across countries. It’s segmented into three levels: sourcing, distribution, and consumption. The supply chain’s complexity and unpredictability often lead to inefficiencies and disruptions. 

 Key risk factors include: 

  • Disconnections and lack of accountability among supply chain partners. 
  • Long lead times and the “bullwhip effect,” where demand changes cause supply fluctuations. 
  • High operating costs due to maintaining optimum inventory levels. 
  • Transportation-related risks like delays and damage to goods. 
  • Impact of natural disasters, political instability, and pandemics on the supply chain. 
  • Regulatory challenges include documentation, changes in standards, and drug recalls.

Methodology
The study adopts a risk management approach using Failure Mode and Effects Analysis (FMEA) and Data Envelopment Analysis (DEA). FMEA helps identify potential failure modes in the supply chain, while DEA is used to calculate risk-based efficiency. The methodology involves fuzzification of risk factors, risk assessment metric development, and the use of Fuzzy Inference System (FIS) and DEA for evaluating failure modes. 

Results and Analysis
The study’s application to the Malaysian pharmaceutical supply chain reveals: 

  • High-risk factors at the manufacturing node include delays in raw material supply due to overseas suppliers. 
  • The distributor node faces moderate risks due to transportation and inventory management challenges. 
  • The pharmacy node shows the highest risk, particularly due to unexpected demand surges and lack of substitute drugs. 
  • The DEA cross-efficiency method highlights the varying risk levels across different nodes of the supply chain, emphasizing the need for targeted risk mitigation strategies.  

Managerial Implications
The study suggests a framework for incorporating digitalization into the pharmaceutical supply chain to mitigate risks. Key recommendations include: 

  • Collaborative technologies for information sharing to manage inventory and reduce the bullwhip effect. 
  • Blockchain technology for drug sharing networks, improving data transparency and trust. 
  • Utilization of data analytics and AI in manufacturing to address supply delays and enable more effective forecasting. 

Conclusion
The study concludes that medicine shortages are a pressing issue in the pharmaceutical supply chain, exacerbated by complex risk factors. Digital technologies, especially big data analytics and blockchain, are crucial for addressing these challenges. The proposed framework for digitalization aims to enhance the efficiency and resilience of pharmaceutical supply chains.  

Trust Your Supplier (TYS): Empowering Suppliers in the Digital Age

Exciting news is on the horizon as Trust Your Supplier (TYS), our revolutionary supplier management platform, achieves a significant milestone by securing its place at the center of Dr. Elouise Epstein’s Spider Map. This accomplishment marks a pivotal moment in TYS’s journey, highlighting its commitment to empowering suppliers and reshaping the landscape of risk and compliance management.

Empowering Suppliers with Data Ownership:
TYS stands out as a groundbreaking solution that prioritizes supplier empowerment. At its core, TYS is designed to give suppliers complete ownership and control over their data. This is a game-changer in the supplier management space, as it introduces the concept of digital wallets for suppliers, providing them with a secure and efficient way to manage their information.

Digital Wallet Concept:
The digital wallet concept is at the heart of TYS’s innovative approach. By enabling suppliers to have their own digital wallets, TYS allows them to store and manage crucial data securely. This not only streamlines the data-sharing process but also ensures that suppliers have autonomy over their information, fostering a new era of transparency and trust in supplier relationships.

A Milestone in Dr. Elouise Epstein’s Spider Map:
Dr. Elouise Epstein’s Spider Map serves as a testament to TYS’s exceptional capabilities and potential. Positioned at the center of this influential map, TYS is recognized for its commitment to supplier empowerment and data ownership. This strategic positioning reinforces TYS’s role as a leader in the supplier management landscape.

Revolutionizing Risk and ESG Markets:
As the Risk and ESG markets undergo significant transformations, TYS emerges as a frontrunner, ready to revolutionize these industries. With a robust data foundation and the digital wallet concept, TYS provides cutting-edge solutions and insights that are poised to shape the future of risk and compliance management.

Looking Ahead:
The future looks promising for TYS and its stakeholders. By putting the power back in the hands of suppliers and offering innovative solutions, TYS is set to drive positive change in the supplier management landscape. As industries evolve, TYS remains dedicated to staying at the forefront, delivering value, and shaping a future where data ownership and transparency are paramount.

Trust Your Supplier’s latest achievement in securing a central position in Dr. Elouise Epstein’s Spider Map underscores its commitment to revolutionizing supplier management. With the digital wallet concept and a strong focus on data ownership, TYS is well-positioned to bring about transformative changes in the Risk and ESG markets. As TYS continues to pave the way for a new era in supplier empowerment, the future holds exciting possibilities for the platform and its users.

Resolute Resolutions: Steering the Supply Chain with Year-Long Focus

by Michelle Armstrong, TYS Global VP of Value Solutions Consultant

As we embark on a new year, the omnipresence of New Year’s resolutions is undeniable, whether it be on social media, in conversations, or in the news. For many of us, the commitment to these resolutions begins fervently in January but tends to wane as quickly as the holiday decorations are put away. In the supply chain realm, these resolutions take on a strategic and operational significance.

Plan and Play Smart
A key resolution in supply chain management is the adoption of real-time visibility for both supply and demand, enabling effective scenario planning and inventory optimization strategies. This visibility is critical for adapting to changes and making timely, resolute decisions. Integrated Business Solutions are essential in this regard, enhancing the synchronization of supply chain risk and real-time planning. The economic fluctuations affecting sales, operations planning (S&OP), forecasting, demand response, supply, and inventory planning emphasize the need for an agile approach with high visibility. 

Taking Out the Garbage: Data Hygiene
Another crucial resolution involves tackling ‘garbage data’ – data that is inaccurate, unusable, or untrustworthy. Cleaning up and ensuring data reliability is fundamental. The steps to improve data hygiene include: 

  • Audit: Assessing the current data situation and identifying issues in data collection processes. 
  • Standardize: Creating consistent reporting processes aligned with organizational goals. 
  • Deduplicate: Utilizing automation to reduce duplication and human error. 
  • Verify: Testing the reliability and accuracy of the data post-clean-up. 

Strengthen Your Business Networks
The cost of disruption in the supply chain extends beyond finances to brand perception and customer satisfaction. Achieving 360-degree, real-time visibility across the entire end-to-end supply chain is vital. Integrated platforms that allow instant information sharing with suppliers, partners, and third-party providers are essential for transparency, fast decision-making, and enhanced customer satisfaction. 

Closer Scrutiny of Materials Suppliers
Materials suppliers, often less scrutinized than contractors, now face increasing scrutiny due to economic and regulatory pressures. Ensuring compliance with health, safety, quality assurance, environmental protection, and ethical practices is paramount. Supporting suppliers in demonstrating their compliance with supply chain risk management practices is crucial in navigating the complex maze of global and regional regulations. 

Embracing Technology and Innovation
Incorporating technology and innovation is pivotal. Digital transformation can significantly streamline operations. Integrating advanced analytics, AI, and IoT technologies can revolutionize supply chain management. 

Fostering a Culture of Continuous Improvement
Encouraging a culture of continuous improvement is essential. This involves open communication, regular training, and celebrating milestones to align the team with organizational goals. 

Adapting to Change and Overcoming Challenges
The supply chain industry faces numerous challenges, including market fluctuations and global disruptions. Balancing steadfast commitment to resolutions with the flexibility to adapt is key to resilience. 

Conclusion
As we progress through the year, let’s focus on these resolutions with strategic planning, data management, strengthened business networks, and rigorous supplier scrutiny. Let’s make this year count by staying focused, resilient, and committed to our goals in the ever-evolving landscape of supply chain management. 

Navigating Data Governance in Supply Chain Management: The Critical Role of Supplier Segmentation

by Michelle Armstrong, TYS Global VP of Value Solutions Consultant

In today’s global business environment, managing supply chain risks and ensuring compliance with both regional and global regulations is more challenging than ever. Central to this challenge is the effective governance of supplier data, which encompasses a wide range of aspects from contracts and insurance to audits and purchase orders. This blog explores the importance of utilizing supplier segmentation as a strategic tool in managing data governance and mitigating risks. 

Understanding Supplier Segmentation: 

Supplier segmentation is the process of categorizing suppliers based on various criteria such as spend, risk, strategic importance, and compliance. This segmentation allows organizations to apply different management techniques and resources based on the category of the supplier. 

Enhancing Data Governance through Supplier Segmentation

>Revalidation of Data: Regular revalidation of supplier data is essential for maintaining its accuracy and relevance. Segmentation helps prioritize which suppliers require more frequent or detailed revalidation processes. 

>Risk Assessment: Different suppliers pose different levels of risk. Segmentation allows for tailored risk assessment strategies, focusing more intensely on high-risk or high-impact suppliers.

Compliance with Global and Regional Regulations

>Understanding Regulatory Landscape: Each segment of suppliers may be subject to different regulatory requirements based on their location, size, or industry. 

>Customized Compliance Strategies: Segmentation enables the development of compliance strategies that are specifically tailored to the regulatory requirements of different supplier groups. 

Third-Party Risk Management

>Identifying and Monitoring Risks: Effective segmentation helps identify the various risks associated with each supplier group and setting up appropriate monitoring mechanisms. 

>Proactive Risk Mitigation: By understanding the risk profile of each segment, companies can proactively develop mitigation strategies.

Contract Management and Insurance

>Tailored Contract Strategies: Different supplier segments may require different contract terms and conditions based on the level of engagement and risk involved. 

>Insurance Requirements: Supplier segmentation helps in determining appropriate insurance requirements and levels of coverage for different supplier categories. 

Audits and Purchase Orders

>Audit Planning: Segmentation aids in planning audits, focusing resources on high-risk or high-value suppliers. 

>Streamlining Purchase Orders: By understanding the nature and requirements of each segment, companies can streamline their purchase order processes for efficiency and compliance. 

Conclusion

In the complex and ever-evolving world of global supply chain management, supplier segmentation stands out as a vital tool for effective data governance. It not only ensures compliance and mitigates risks but also optimizes resources and enhances operational efficiency. As businesses continue to navigate the intricacies of global and regional regulations, the strategic use of supplier segmentation will be a key factor in their success. 

Want to learn more? Let’s talk!

 *** 

Trust Your Supplier (TYS) is a Small, Minority and Woman owned business with a global reach offering an innovative blockchain-based solution for supplier and risk management to large and mid-size enterprises. By harnessing the immutability of the blockchain, TYS ensures daily monitoring, historical, predictive, and prescriptive risk insights, enabling trusted data exchange and workflow automation beyond traditional boundaries. This distributed ledger technology fosters transparency, efficiency, and empowerment for businesses to effectively manage suppliers and mitigate risks.  

The Evolution of Supplier Management (Part 2)

Winning the Tomorrow War, Today

by Gary Storr, General Manager

In Part 1, I talked about how this will be the first time your AI technology capability will – through Supplier Digital Identity, “put your organization ahead of future industry demands.”

I then emphasized the importance of “laying a universally consumable digital supplier identity foundation” today to achieve an unprecedented level of “supplier trust…and a single version of the truth.”

Let’s revisit the following graphic from the first post to understand the bridge or path to getting to trust and a single version of the truth.

 

If you take a step back to reflect on the above, it is hard to argue with the validity of the key points or theme. In short, moving to the “future state” that is Supplier Digital Identity sounds good.

But what does it mean, e.g., the future state of Supplier Digital Identity in the here and now? How do you leverage AI to get there? And what tangible benefits will it deliver? To put it another way, what good is my telling you about Eden and how great it is and then not showing you the way to get there?

It Isn’t About The Technology

As a service provider with what I believe is the most amazing technology in the industry, you will be surprised by what I am about to say.

Getting to that single version of truth and supplier insight is about something other than the technology. It is about the expertise behind that technology. To be clear, when I say expertise, I am not just talking about a deep understanding of how the technology works. I am talking about the knowledge and anticipation of the expected and unexpected external disruptions we face in a dynamic and complex world and how to leverage said technology to determine the appropriate response.

For example, the organizations with whom we work are consistently talking about:

  • Concern about the supplier data they house being accurate and current to ensure they have the latest view on that, supplier’s qualifications, credentials, performance, et cetera.
  • The flurry of the evolution of rules, standards, and requirements – that are much more diverse than they’ve ever been.
  • Adoption, cycle time reduction, and administration are “hugely important.”
  • Increasing awareness of the importance of “authoritative data.”

The above are only a few examples of where companies want and need to go to arrive at that future state of optimal supplier management capability. To reach this state of capability, you must look beyond the technology to assess your service provider’s ability to address these points and many others.

The Right Captain For The Right Vessel

You have to have a partner who will have the same vision as you do.

For example, if a partner is “established” in older technology, or if a partner doesn’t understand the regulatory compliance landscape worldwide, or doesn’t have some insights into particular industries that you’re in, you can be guided off course.

It’s a little bit like the analogy that there’s a difference between a sailboat and an oil tanker. You have to hire the right captain for the sailboat and hire a different captain for the oil tanker.

If you prefer something a little less nautical, In Good To Great, Jim Collins said – and I paraphrase “You have to have the right people in the right seats on the right bus.” What success ultimately comes down to is having the right service provider partner with the right expertise doing the right things!

If you do, you will successfully transition from the emerging standards of today to the necessary future state of Supplier Digital Identity and its competitive edge.

The Evolution of Supplier Management (Part 1)

Successfully Addressing Today’s Needs While Preparing for Tomorrow’s Challenges

by Gary Storr, General Manager

“How do we overlay today’s needs with tomorrow’s needs and build a bridge that organizations can invest in today and be ready for tomorrow?”

During a recent interview, I gave the above response to the question “Where is supplier management technology now, and what it will look like in the future?” It is seemingly a straightforward question. But underlying its simplicity is the complexity of building and proactively managing dynamic and interconnected supply networks in a volatile global marketplace.

Now one might think that as a solution provider, my focus would be on the technology part of the equation. Even though emerging AI technology is the main event when it comes to supplier management, you must look beyond it to the experience and expertise behind it.

Think about it for a moment. ESG investing began in the 1960s as “socially responsible investing, with investors excluding stocks or entire industries from their portfolios.” The industries on the no-investment list included tobacco companies and any businesses deemed to be supporting the apartheid regime in South Africa.

Now ponder this fact – ESG reporting did not begin until 2004 under the UN “Who Cares Wins” banner. Here we are in 2023, and it is only recently that things like carbon emissions, ESG, and global compliance have become emerging mainstream regulatory concerns.

The above “timeline” raises two essential questions:

  • Why are companies now scrambling to comply with new legislative requirements and proposed future ones when we saw this train coming as far back as the 1960s?
  • Regarding future regulations, e.g., ESG, what will the reporting (and technology) requirements be next year or decade? By the way, if you want a glimpse into what is on the compliance horizon, check out the following ESG Regulations link.

From my standpoint and experience, we need to do two things so that we don’t continue to play catch-up with known and unknown compliance realities. In today’s post, I will tell you the two things you need to do to stop chasing compliance and start mastering (and benefiting) from it.

First, A History Timeline Review

 

Regarding the evolution of supplier management platforms, the old saying “if you can’t measure it, you can’t manage it” tells a notable story.

In the above graphic, you will note how we have progressed from a “blind trust” qualification process to where we are today – somewhere between email and spreadsheets and corporate web portals.

As your service provider, you will be happy to know that we are on the leading edge of the emerging standard: enterprise supplier networks. I will get into what this emerging standard is shortly.

That said, we have also created an overlay between today’s and tomorrow’s supplier management needs. Why is this important?

It is important because instead of implementing technology to catch up with emerging requirements, we are also creating a seamless bridge to put you out front of the proverbial curve to address not yet known future requirements. If you think about it, this will be the first time that your AI technology capability will – through supplier digital identity, put your organization ahead of future industry demands. 

The Here And Now

In Part 2 of this series, I will get into the specifics of supplier digital identity. However, we can’t take our eyes off the immediate challenges you face in managing your present-day supplier network, including the importance of:

  • Reliable supplier data
  • Digital supplier discovery
  • Minimized administration
  • 3rd party verifications

Through this immediate capability, you will meet today’s demands while laying a universally consumable digital supplier identity foundation that will create unprecedented supplier trust and a single version of the truth.

Up Next: The Evolution of Supplier Management (Part 2) – Winning The Tomorrow War, Today

FAQ: How do questionnaires play a role in supplier compliance & risk management?

Frequently Asked Question: How do questionnaires play a role in supplier compliance & risk management?

How do questionnaires play a role in supplier compliance & risk management?   Trust Your Supplier (TYS) questionnaire features range from supplier self-audit forms to predictive questionnaires. 

Learn more about these and other questionnaire features with these resources: 

TYS Questionnaire Features Infographic 

The “Q” Word blog post

When It Comes To Data, Failing To Plan Is Planning To Fail

by Sai Nidamarty, TYS Cofounder & CEO

Data knowing is a significant and intimidating problem that almost all organizations face, yet they need the data culture and cycles to do something about it. Beyond focusing solely on the consequences of bad or missing supplier data, we have convened a panel of industry experts and thought leaders to closely examine the data challenge from the following three critical points: 1. Data consequence 2. Data culture 3. Centralized planning & supplier oversight data framework. – Supplier Data: What You Don’t Know Can (And Will) Hurt You

The above link is to a webinar on which I was a panel member with Tom Redman and Greg Tennyson. From its title, you can see that we were talking about the importance of data.

Of course, data being important is not a new revelation. Nor is it a subject that hasn’t received significant attention in the media. However, despite its ubiquitous presence, many organizations still need help turning their vast amount of raw data into actionable knowledge. The question is, why? Of even greater importance than the why is how do we fix it – how do we convert our data currency into tangible returns?

During this panel, we answer this latter question.

Data “Street Cred”

Tom Redman and Greg Tennyson are recognized industry thought leaders. Tom, who graduated from Florida State University in 1980 with a PhD, Statistics and worked with AT&T Bell until 1995, when he started his company “The Data Doc,” has written extensively, including a compelling article on data for the Harvard Business Review.

Greg has a procurement pedigree going back to the late 1990s with companies like Oracle, SalesForce, and Coupa. As for me, my experience dates as far back as the early 1990s in the positions of software engineering and program management with IBM.

In short, individually and collectively, we have a deep understanding of not only technology but data as well.

Based on the above, you must know that the panel discussion would be uniquely insightful because we weren’t tackling the data question from a conceptual or theoretical basis. What this means is that during the 60 minutes, we didn’t just talk about the challenges with data but what you can do “about” getting the most from your data using my 3-Point Supplier Data Plan.

The 3-Point Supplier Data Plan

“Partner, Mitigate, Comply is at the heart of the 3-Point centralized planning & supplier oversight data framework. Going forward, I will call it the 3-Point Supplier Data Plan.” – Sai Nidamarty

So, what is the 3-Point Supplier Data Plan?

During the panel, Tom, Greg, and I discussed at length the specifics of the 3-Point plan, including how you can introduce it to your organization. By the way, you can use this 3-Point link to access the on-demand recording of the session.

In the meantime, at a high level, here is a quick overview or outline of the supplier data plan:

Point #1 – Partner

  • Enterprise data drawn from many data sources are generally inconsistent, incomplete, and unreliable for decision-making. Partnering & investing with automated tools to onboard, manage and monitor a single source of truth for the entire supplier base
  • Enhance authenticity and provenance, creating a data culture with a single source of truth
  • Collaborating with suppliers for the exchange of information
  • Establish relationships with comprehensive 3rd party data providers in monitoring supplier risk in real-time; take appropriate actions to mitigate

Point #2 – Mitigate

  • Data and transactions MUST be transparent with an immutable audit trail
  • Simple, quick discovery of qualified, trusted suppliers
  • Nearly touchless supplier onboarding – A faster turnaround of query resolution and proactive alerts enabling better & timely strategy realignment
  • Monitoring risk is now at least equal to monitoring spend & margins for procurement organizations
  • Governance of data management throughout the supply chain
  • Integrate with a range of immutable ledger technologies

Point # 3 – Comply

  • Maintain control of authenticity throughout the supply chain – enhancing supply chain visibility and risk.
  • Comply with regulative reporting and compliance regulations (SCDDA, Diversity/human rights laws, insurance)
  • Meeting internal objectives on compliance (e.g. ESG)
  • The continued evolution of a globally compliant supplier base
  • Blockchain uses digital signatures, data encryption, and cryptographic function to protect the integrity of the data.

Once again, I invite you to use the above links to access the on-demand version of the webinar.

I would also suggest that you stay connected with us, as we are planning to do a special live – open mic Q&A session, where we will specifically discuss the 3-Point Supplier Data Plan in much greater detail. Follow us on LinkedIn or Twitter for updates.

The Emperor Has No Clothes: The Harsh Truth of Missing or Dirty Data

by Jon Hansen, Chief Editor, Procurement Insights

Did you know the average number of webinars a company hosts annually averages between 23 and 25? I moderate a good number of webinars, but considering how many companies there are and multiplying that by 23 to 25, the total number is beyond fathomable.

The question is, how do you sift and choose the right webinar out of an abundance of options?

For me, the webinars I get the most from are those in which there is frank, at times thought-provoking discussion between industry thought leaders that provide unique insights you can’t get anywhere else.

Of course, the challenge is that many topics have been covered ad infinitum. When I agreed to moderate a panel discussion regarding missing or dirty data, my main concern was what more could be said that still needs to be said.

Panel Power

It turns out there is a great deal left to say – especially when you have an incredible panel. I know that the panel for this upcoming webinar, “Supplier Data: What you don’t know can and will hurt you,” is one such panel.

Between Tom Redman, Greg Tennyson, and Sai Nidamarty’s collective experience and expertise, you will never see data in the same way again.

How do I know?

I record and transcribe every dry run. For those unfamiliar with a webinar dry run, besides testing the connectivity regarding picture and sound, we engage in an off-the-cuff assessment of the subject we will discuss when we go live. I have done many of these – in fact, I have lost count, but this one was a little different. I am almost tempted to use this recording in place of the live event on May 18th. Just kidding, but you get my point.

However, I will share a small excerpt of the transcript from the session with you because when you read it, I know you will want to sit in when we go live. Below is just a small sampling of what you can expect – not only concepts but tangible insights and answers to enable you to think of data differently.

Use the following link to reserve your seat at what promises to be a most memorable session: Supplier Data: What You Don’t Know Can (And Will) Hurt You.

The “Transcript”

Do we see it beyond, let’s say, the narrow scope of, well, there’s supplier data, there’s information, but overall understand the repercussions of data?

Tom Redman ·10:32

What were the repercussions here, Jon?

Jon Hansen ·10:34

Well, to start off, let’s put this way. The customers ended up being charged $150,000 on their credit cards, even though they only had a $10,000 limit. Let’s go to the next one. Another customer charged $674,000 for airline tickets, while others are paying free travel vouchers by paying taxes, associate fees, and they were told, oh, by the way, that was a mistake. We cancel all your flights. And then there’s even in terms of this data and the reach of it struggles, in terms of suppliers, in terms of engagement, in terms of filling orders. I mean, with Peloton, that cost them dearly. And they had to revert from going their usual route of shipping product by transport. They had to go to air transport, which increased their cost challenges. There Rotax, Bombardier, and again, this goes and ripples through the supply chain.

Jon Hansen ·11:39

The Russia that bombed Ukraine, and they found out that they had the Rotax and the Bombardier parts in there. So now there’s a big investigation. There’s potential sanctions, but it’s not only that company, the companies there Rotax and bombarding, but it also what will that do in terms of relationships? I mean, this is like, do we think about it in these real.

Sai Nidamarty ·12:11

Impact?

Jon Hansen ·12:11

Do you see what I’m saying?

Tom Redman ·12:13

Not yet. Who has actually been hurt by these?

Jon Hansen ·12:21

Okay, now that’s an interesting question. That’s why I asked these. Who does get hurt by this? I mean, maybe that’s what we have to look at with data. Who gets hurt when data isn’t accurate? To what extent does it impact the marketplace? What happens if, for example, with the Rotax and the Bombardier situation, where now all of a sudden, the whole supply network, including the smaller suppliers that contributed to the building of this product, get sanctioned and fined? What impact will that have on Bombardier’s customers, employees, the business? Do you see what I’m saying? I mean, it’s not just a balance sheet consideration here.

Greg Tennyson ·13:02

I’m following.

Jon Hansen ·13:03

Go ahead.

Tom Redman ·13:04

I’m sorry, Greg.

Greg Tennyson ·13:05

Yeah. No, I’m following, Jon. It’s a reputational risk. It’s the impact to the employee for loss of jobs. It’s the supplier losing revenue because now they have sanctions, they’re disbarred from doing business, etcetera. So the implications are far and wide.

Jon Hansen ·13:21

I think that’s really the whole messaging here. It’s like the Peloton. It wasn’t a question of whether or not they had the data. Reports show that they had the data available. They just didn’t know how to read it. They didn’t know how to recognize what the data was telling them. So even if you have data and everyone does, even if you cleanse that data and the process for doing that, I mean, reading it and being able to anticipate what it means, that seems to be a struggle for a lot of companies. Am I wrong?

Tom Redman ·13:57

I don’t know. Like, still, most of this I find maddeningly abstract. So what happened? Is Peloton as a result. I mean, is Peloton out of business? Right? Have sales tanked by 30%? Have people been fired, by the way? These things happen all the time, right? Yes, there is potential things that can happen. Right. But why are you looking at these not similar ones. Why aren’t you looking at the bad counting in the census, which caused three is it three or six? number of states to be misassigned their right number of representatives, which over ten years they don’t get the money they deserve of the 1.5 trillion that the government disperses annually?

Tom Redman ·14:53

I wrote a report one time in Peer and Sloan Management Review that synthesized this and said a good starting point for the cost of bad data for a company is 20% of revenue. Right. By the way, I mean, I do appreciate the need. For example, Boeing Seven is it the seven three seven max, which the sort of angle of attack sensors failed, crashed a couple of planes, cost 430 some people their lives. Right? Think of $100 million. Delayed all those planes from coming out. Right. Whipsawed through the supply chain. Those are tangible things that have happened.

Sai Nidamarty ·15:49

So you bring good points, Tom.  There is a McKenzie study that is published, and I will get the links to that. There is 1% EBITDA big organizations lose because of supplier disruptions that companies don’t even know how to really manage or calculate it. Right? And that is all happening because of a lot of supplier disruptions, not having the proper supplier data, those kinds of things. Right? 1% EBITDA is a big number to really manage their supplier data in a way that they’re actually doing their whole supply chain with a lot of proper insights and coming out with accurate data. Right? Microsoft’s CEO said that data culture is very important for us. Every decision that we make should be based on the right data that we are having, and that way we can make the right decision.

Jon Hansen ·17:23

You hit it on the head and Greg, you put in the comment about Boeing 737 was a $2.5 billion impact. And Tom, when you mentioned about Peloton yeah, the CEO got fired. They lost a huge amount of money, market share. April Harrison indicated in the chat that they had a major recall of parts. What’s interesting about this, and this is what I wanted to bring out in these discussions is to turn it from a conceptual one to drilling down. What exactly are the impact in real world circumstances? What are the impact in terms of, again, $2.5 billion impact, greg, that’s significant. That’s money, but that’s lives and all other kinds of factors in there, let alone the damage to their brand.

Greg Tennyson ·18:03

Right, right. Completely agree.

Sai Nidamarty ·18:07

Yeah. And Tom, to your point, right. How is that impacting? Are people getting fired or are companies losing money? People may not be getting fired, but companies are losing money. It is affecting their revenue, it is affecting their profit margins, but no one is able to really articulate it in a proper way. Right? Because look at it right now, we are working with a client. They are a very large client, and they have almost 100 plus ERP systems. When each ERP, a lot of things are coming from acquisitions and they don’t all have proper data management. Data culture. Right? They’re creating a lot of data inaccuracies, a lot of mismatches, and that is actually driving their inefficiencies, driving a lot of costs and all that.

They understand it, but they don’t know how to fix it because all these organizations are creating their processes and change management so complex that they’re creating the problem. It is impossible without clean data. That’s precisely what I’m trying to allude to. Right? That change management makes it so difficult because it is all done by people and the processes are becoming so complex that this is becoming a very big problem.

Jon Hansen ·19:56

And what’s interesting, and you see this is the whole thing of what I want to do with this first step, and this is very much what it’s going to be like, the discussion. I’m not looking for consensus or Q and A answers. I’m looking at this from the standpoint of this kind of roundtable type of discussion where, Tom, you sit there and say, yeah, but what does that mean? What about this? Because I think there’s not enough clarity here. And when it comes down to the data culture statute, we got to create a data culture that everyone can make better decisions. Well, what’s a data culture? And I mean, even in a Harvard Business Review article, they’re talking about, yes, it’s a cornerstone creating a solid data practice foundation.

What Is The Real Cost Of Missing Or Inaccurate Data?

by Sai Nidamarty, Trust Your Supplier Co-Founder & CEO

Let’s get the cursory narrative regarding the cost of missing data out of the way first. 

We have all heard Peter Drucker’s business maxim, “If you can’t measure it, you can’t manage it,”. It is a timeless guidepost of how we run our businesses. By the way, Peter never actually said that, but that is a story for another day. 

 Then we can turn to the various articles and studies over the past few years reporting that bad or poor-quality data costs the U.S. economy $31 trillion annually. That’s a big number, and so is the finding that 90% of the world’s data was created in the last two years. 

The above are all facts and verifiable. But what do they really mean? What does missing or inaccurate data really cost on a practical, everyday level?  

There are better venues for a deep analysis than the limitations of an article or blog post. My focus today is to start a dialogue enabling you to transition data strategy from a broad horizon concept to an actionable on-the-ground understanding. In other words, you already know that data is important and that there are consequences for missing or inaccurate data. What’s needed now is to answer the question, what will you do about it? 

Data Challenges 

In an upcoming webinar, we will convene a panel of industry experts and thought leaders to closely examine data challenges from the following three critical points: 

  • Data consequence 
  • Data culture 
  • 3-Point centralized planning & supplier oversight data framework 

When we talk about “data consequence,” we are not talking about broad-stroke generalizations but a fundamental and accessible understanding of impact. 

For example, a news article reported that due to a data glitch, Hawaiian Airlines charged dozens of customers “hundreds of thousands of dollars in credit card fees.” 

One customer reported being “mistakenly charged more than $150,000,” even though they have a “$10,000 limit on their Hawaiian Miles credit card.”  

While another customer was charged $674,000 for airline tickets, others obtained free travel vouchers by paying taxes and associated fees. You can imagine the frustration when the airline canceled their flights. 

Beyond a financial mess, the airline’s reputation also took a significant hit. How do you measure that in dollars? 

Unfortunately, examples like the one above are not rare or isolated incidences limited to the travel industry. Nor do most cases present themselves in such a prominent and noticeable way. Data quality erosion is an even bigger problem because you may only recognize it once its impact is evident on a larger, less manageable scale. 

Creating The Right Culture 

Given the volatility of supply networks in the post-pandemic world, it isn’t surprising to hear the C-Suite talk about supply chain visibility, resilience, and risk management. 

A recent post by Nick Picone regarding a contentious issue about inflationary price increases between a large, national grocery chain and Frito-Lay underscores the importance of data visibility and transparency. 

But how do you get to the point of leveraging tools and technology to move from data darkness to data insight and understanding? 

A May 2021 article in Procurement Insights highlighted the importance of creating a data culture starting at the C-Suite level. According to the author, CEOs must “recognize the importance of data beyond a conceptual perspective and see it in a practical bottom-line context.” Citing everything from “customer satisfaction and regulatory compliance” to employee empowerment, they make a strong case for “becoming a data-driven organization.” 

The 3-Point Supplier Data Plan  

Partner, Mitigate, Comply is at the heart of the 3-Point centralized planning & supplier oversight data framework. Going forward, I will call it the 3-Point supplier data plan.   

The 3-Point supplier data plan focuses on providing tools and data for organizations to efficiently partner with trusted suppliers, mitigate risk, and ensure ongoing compliance.  

In addition to data consequence and culture, during the upcoming webinar, the panel will get into the specifics of the above 3-Point plan highlighting how you can introduce it to your organization. Register to save your seat.