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Managing the flow of supplier-related data in financial services

Doug Hague, Vendor Analytics Executive from Bank of America, shared insights on how the financial services industry is facing a lot of pressure to supply-related analytics and management of suppliers.   A good example is “robo-signing”, performed by third party vendors, and the need to establish controls and oversight over activities in loan servicing, loss mitigation, and foreclosure-related support.  There are also concerns about cybersecurity, and it is a supply chain problem.  There are also concerns about the security of the things we buy and the sub-tier suppliers who can put things into these technologies, posing a risk.

With all of these risks, the importance of managing and building a solid analytics platform for supply base management is imperative.  You need data architecture and flow to ensure that information is time-stamped, and whether the data is being provisioned correctly in data warehouses and driven into the right analytical sandboxes.

Doug emphasized that “Data quality is a skill set, and  it is not easy.  If you will invest in data warehouses, don’t forget about data quality.  Most of us think it is drudgery work:  checking to see if data elements coming in are correct (e.g. NAICS codes) and ensuring the validity of the data.  A simple thing like a NAICS code, if not entered correctly, can cause problem in vendor identification.

Once you have clean data – what do you do with it?  The first thing you do  is put together a report!    These are often never-ending but they are required for management oversight.  Managers want to be able to customize reports and look at the contract to drive cost controls.  Excel is still the software of choice for many managers who access and download data into dashboards, and scorecards – and eventually into analytics.

Companies in financial services want to optimize for supply chain.  But WHY?  Doug notes that “You have to frame the problem first and how to categorize it from upfront.  Companies also want to stratify and manage vendor risk, especially for high risk categories and global contracts.  Risk has to be defined and then stratified, and knowing which supplier to let go and which to manage is driven by analytics.  There are many types of risk analysis – information security, business continuity, subcontracting, globalization, reputational risk, regulatory risk, strategic risk, performance risk, and financial risk.  Companies also need to determine if processes are operating as expected, and whether employees following the process?

Stress testing your portfolio is also an important element of analytics, and how do you deal with hurricanes, or major breaches of software and security, if computer networks go down for instance.  Companies are trying to explore the types of information we have in these types of scenarios  –and how they will unfold and the impacts that might occur.

The bottom line:  Information and Analytics play a critical role in managing your supply chain.  Decisions need information and analytics, as all stages of supply chain management require reliable data as inputs and in validating outputs.  This means companies need to invest in data architecture quality and flow, especially with the deluge of data exhaust coming out of supply chains.  Supply chain executives need to know who their suppliers are as the single connecting data point throughout the entire life cycle flow of the source to pay cycle, as well as to mitigate and manage risk associated with the entire supply chain..