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Make risk due diligence part of the source-to-pay process
With SAP Ariba Supplier Risk, you can help your buyers make smarter, safer decisions before purchase by making risk due diligence a natural part of the source-to-pay process. And when your buyers are well-informed, they’ll make decisions that prevent supply chain disruptions. That helps you avoid damage to your revenue or reputation. Also, you’ll gain a high degree of confidence that your supplier information is correct and up to date.
This market-leading supplier risk solution lets you tailor risk views and alerts to your business, to each supplier relationship, and to your role. You can also segment suppliers based on your risk exposure. With a complete view of key suppliers, you can make more timely, contextual, and accurate business decisions – and improve collaboration with your trading partners.
Supplier Risk Management: Product Features
Frequently Asked Questions
What is supply risk?
Supply risk or supplier risk is any risk created by the processes and decisions of a supplier that could negatively impact your company. A supplier’s policies, financial well-being, and data security are all examples of potential supplier risks. Supply risk can also occur when your business relies on too few suppliers or lacks sufficient insight into its supplier network. Without a strong network of suppliers with transparency, businesses are ill-prepared to withstand disruption.
There are four primary dimensions of supplier risk to consider: financial; operational; environmental and social; and regulatory and legal.
- Financial risk: What is the risk of your supplier going out of business? When you think about financial risk, consider how a particular supplier’s solvency will impact your ability to fulfill your own obligations to customers.
- Operational risk: Do your suppliers keep their operating locations, technology systems, and data secure? Operational risk spans the wide variety of risks that occur because of everyday operations. In many cases, these risks cannot be eliminated, but your business can reduce supplier risk by choosing suppliers who actively work to reduce their own operational risk.
- Environmental and social risk: What environmental events and social conditions are relevant to your suppliers, and how could they impact your business? For instance, a manufacturer with operations in a region with frequent earthquakes may be a higher risk supplier than a manufacturer that does not often experience earthquakes or other natural disasters. Examples of social conditions that could disrupt your business include a supplier’s use of child labor or the likelihood of foreign invasion in a supplier’s country of operation.
- Regulatory and legal risk: Is your business aware of government regulations in your suppliers’ countries of operation? Regulations can change frequently and may disrupt your business if you aren’t prepared when a supplier can’t deliver, or costs increase because of new regulations.
How do you manage supplier risk?
You can manage supplier risk by creating a transparent and holistic view of supplier risk. This begins with supplier risk management, which is a strategy that can help your business prioritize supplier risk throughout procurement.
What is a high-risk supplier?
A high-risk supplier is a supplier whose actions could disrupt your own company’s operations and success. Financial instability, poor data security, and unethical business decisions are all examples of factors that could turn a supplier into a high-risk supplier. These factors vary by industry. For example, an international footwear enterprise probably won’t face disruption if one of its suppliers goes out of business. However, this business may suffer greatly if it is revealed that a supplier relies on unethical labor practices. Similarly, a bank may not have to worry about suppliers’ labor practices, but it needs to ensure that its suppliers’ data management practices are secure to keep customer data safe.
What is supplier risk management?
Supplier risk management is the process of evaluating supplier risk and managing it throughout the entire supplier lifecycle and all procurement processes. Supplier risk management helps your business ensure that the right checks and protocols are in place to keep your business resilient and safe from supplier risk. Increasingly, supplier risk management relies on software solutions that can help businesses perform these tasks faster and more accurately.
What is ariba supplier risk management?
Ariba supplier risk management is a solution, called SAP Ariba Supplier Risk, that helps remove the challenge from supplier risk management so your business can focus on creating better relationships with suppliers and meeting the demands of customers. The SAP Ariba Supplier Risk solution empowers your business to work with suppliers that can keep business moving with less risk. It monitors aspects of supplier lifecycle management that you may not have considered and breaks down silos between your business and your suppliers to provide a transparent view of risk.