Mitigating Supply Chain Risk using Big Data Analytics
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Merck KGaA's presentation discusses a comprehensive program leveraging big data analytics to mitigate supply chain risks, structured around six core pillars. This program includes automated risk assessments for suppliers and materials, continuous monitoring of potential threats, and workflows for managing risk-related activities. The ultimate goal is to ensure a reliable supply of high-quality products to customers while effectively minimizing exposure to various supply risks.
Mitigating Supply Chain Risk using Big Data Analytics
- 1. Merck KGaA Darmstadt, Germany Eduard Bagan Head of Supply Security CoE Group Procurement 28 March 2019 MITIGATING SUPPLY CHAIN RISKS USING BIG DATA ANALYTICS
- 2. The life science business of Merck KGaA, Darmstadt, Germany operates as MilliporeSigma in the U.S. and Canada. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 20192
- 3. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019
- 4. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019
- 5. Merck KGaA Darmstadt, Germany AGENDA 2 3 4 5 Supply chain Risk Management program Using data analytics: Defining scope Using data analytics: Determining risk Q&A AGENDA 1 Final considerations
- 6. RISK COMES FROM NOT KNOWING WHAT YOU’RE DOING. Warren Buffet
- 7. Merck KGaA Darmstadt, Germany AGENDA Supply chain Risk Management program AGENDA 1
- 8. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing responsible to determine appropriate action A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 8
- 9. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing responsible to determine appropriate action A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 9
- 10. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing responsible to determine appropriate action A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 10
- 11. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing team to determine appropriate actions A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 11
- 12. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing team to determine appropriate actions A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 12
- 13. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing team to determine appropriate actions A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 13
- 14. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 SUPPLIER RISK ASSESSMENT MATERIAL RISK ASSESSMENT ALERTS SUPPLY CHAIN MAPPING RISK INTELLIGENCE RISK RESPONSE TRACKER ✓ An automated system to assess supplier risk using 29 risk titles and 5 different risk domains (Financial, geo-political, operational, compliance and sustainability) ✓ A semi-automated system to assess the risk of materials used in production, considering both risk probability and risk impact ✓ Suppliers are continuously monitored to capture potential threats to supply security ✓ Supply chain mapping allows to visualize and monitor the suppliers of our suppliers (our Tier-2 suppliers) and further down in the supply chain ✓ A methodology to capture and report special events, broader than standard, that may impact multiple sectors and categories (e.g. Brexit) ✓ A platform to register, track, and visualize activities aimed to mitigate risk ✓ System considers inputs from both structured databases as well as unstructured data ✓ Methodology considers risk score coming from the supplier risk assessment and combines it with additional criteria ✓ These threats can impact suppliers directly (financial trouble, corruption…) or indirectly (natural disasters) ✓ Like for our Tier-1 suppliers, we can also assess risk and monitor these suppliers continuously ✓ Specific task forces are created for each event, and obtained knowledge is shared across the company ✓ The platform uses workflows to manage activities (e.g., approvals, notifications, …) and ensure appropriate governance ✓ System does not require to answer surveys but brings information without the need to contact suppliers ✓ It’s a fundamental part of the BCP exercises ✓ Alerts are forwarded to the relevant sourcing team to determine appropriate actions A comprehensive program based on 6 solid pillars Mitigating Supply Chain Risks Using Big Data Analytics 14
- 15. Merck KGaA Darmstadt, Germany AGENDA 2 Supply Chain Risk Management Program Using data analytics: Defining scope AGENDA 1
- 16. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 Ingest, interconnect, visualize data…and change paradigm BOM – Bill of Materials Supplier Raw Material Finished Product Customer Sales Mitigating Supply Chain Risks Using Big Data Analytics 16
- 17. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 Simple, user-friendly interface, downloadable data Mitigating Supply Chain Risks Using Big Data Analytics 17
- 18. Merck KGaA Darmstadt, Germany AGENDA 2 3 Supply Chain Risk Management Program Using data analytics: Defining scope Using data analytics: Determining risk AGENDA 1
- 19. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 29 risk titles can only be assessed with a powerful data analytics engine • Credit risk (C) • Credit risk (S) • Business decline (S) • Financial insolvency (S) • Financial capacity (S) • Payments delay (S) • Supply chain risk (C) • Risk awareness (S) • Operational capacity (S) Operations • Child labor (C) • Human rights (C) • Sustainability (S • Environmental (S) • Health & safety (S) • Labor practices (S) Sustainability • Corruption / bribery (C) • Corruption / bribery (S) • PEP / SIP (S) • Sanction list (S) • Regulatory breaches (S) • Fair business practices (S) • IP rights (S) Compliance • Crime index (C) • Doing business rating (C) • Economic freedom (C) • Geographical risk (C) • Political risk (C) • Regulatory quality (C) • Social unrest (C) Geo-political STRUCTURED DATA > 15 Standard sources • S&P, FITCH, MOODY RATINGS • D&B • WORLD BANK • MARSH,(EIU) • WGI • INSTITUTE FOR ECONOMICS & PEACE • FACTIVA • CIPS RISK RATING • MAPLECROFT • BLOOMBERG • UN • … UNSTRUCTURED DATA • > 200 different keywords > 8.000 web pages screened daily • > 300.000 daily checks • REUTERS • BLOOMBERG • PLATTS • ICIS • PR NEWS WIRE • FIRST POST • NHC • FIERCE PHARMA • WORLD LII • DAILY MAIL • POLYMER UPDATE • ... > 50 Standard Sources / Subscriptions Web Crawlers (C) = Country (S) = Supplier Financial Mitigating Supply Chain Risks Using Big Data Analytics 19
- 20. Intuitive visualization, drill-down capabilities Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 Mitigating Supply Chain Risks Using Big Data Analytics 20
- 21. Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 2019 Intuitive visualization, drill-down capabilities Mitigating Supply Chain Risks Using Big Data Analytics 21
- 22. Merck KGaA Darmstadt, Germany AGENDA 2 3 4 Supply Chain Risk Management Program Using data analytics: Defining scope Using data analytics: Determining risk AGENDA 1 Final considerations
- 23. PREDICTING RAIN DOESN’T COUNT. BUILDING ARKS DOES. Warren Buffet 23
- 24. Data analytics is fundamental for a robust risk program When building a comprehensive risk management program, data analytics is the best way to assess multiple suppliers along multiple dimensions and capture massive information from the external world Data analytics enables us to convert data into actionable information so mitigation actions can be implemented and supply risk exposure can be minimized 1 2 3 Ultimately, the objective is to provide a reliable supply of high quality products to our customers in the right place at the right time Mitigating Supply Chain Risks Using Big Data Analytics Mitigating Supply Chain Risks Using Big Data Analytics | 28 March 201924
- 25. Merck KGaA Darmstadt, Germany AGENDA 2 3 4 5 Supply Chain Risk Management Program Using data analytics: Defining scope Using data analytics: Determining risk Q&A AGENDA 1 Final considerations
- 26. The vibrant M is a trademark of Merck KGaA, Darmstadt, Germany or its affiliates. All other trademarks are the property of their respective owners. Detailed information on trademarks is available via publicly accessible resources. © 2019 Merck KGaA, Darmstadt, Germany and/or its affiliates. All Rights Reserved.