ROI via automated information management

5 Ways Supply Chain Risk Management Software Provides A Quick ROI – Part 1

Determining the return on investment is an important component when deciding on a professional, automated and software-supported Supply Chain Risk Management (SCRM) Solution.

In this 5 part series we show you 5 easy ways to understand:

  • Savings through process efficiency
  • Avoidance and reduction of crisis costs
  • Understand the sources of potential risk and their financial impact on your bottom line.

 

Everything is good in theory, but that doesn’t help you quantify savings or benefits, so we will give you a free gift: At the end of the series you will find the download link to a ROI calculator to determine your personal SCRM ROI – for free.

 

ROI through automated information management

A key component of SCRM is identifying and evaluating risk situations in the supply chain. The supply chain elements to evaluate (risk objects) are:

  • Suppliers involved
  • Logistics hubs used (harbors, warehouses, etc)
  • Affected countries

Each of these risk objects has a number of individual risks. To determine the risk status, individual indicators (“sensors”) are evaluated and continuously monitored for changes. Today’s organizations typically use specialized third-party services and a multitude of automated news alerts – especially in procurement and logistics.

Even though the alerts give your organization a lot of information, this is all it gives you: A LOT OF INFORMATION. This kind of information is barely structured or integrated, and worse, it is not filtered so you get it all day, every day. The effort of qualifying and rating the avalanche of alerts is overwhelming and time consuming.

Supply chain risk management software provides ROI

Supply chain risk management software provides ROI

 

Supply Chain Risk Management software rates and qualifies alerts, so you don’t have to.

Not only does this new breed of networked software gather information from millions of data sources, it organizes, evaluates and filters the information that is most important for you. The time savings, quality of information and ability to take immediate actions based on alerts establishes ROI quickly.

 

What is in it for you – money on the table?

ROI analysis is based on automating data procurement and evaluation for an example company and real world figures from this study:*

For each procurement and logistics employee involved, an annual figure of 1,958.00 USD is saved, which amounts to 39,150.00 USD in total. ROI type: Savings. Alternatively, around 100 working days can be allocated for value-creating activities.

Here you have it, your first tip of how a SCRM solution can not only save you money, but a lot of time and frustration as well.

 

Have you also read Part 2 of our ROI-series about the “ROI via visibility into your supply chain and suppliers” and Part 3 about “ROI via premium information“?

 

* All figures and assumptions in this article are based on the ROI Study ‘ROI Of Supply Chain Risk Management’, which you can download here. Please refer to the Study and the section ‘Process Model of the Study And Definition Of Terms’ for further details.

Heiko Schwarz is the Founder and Managing Director of riskmethods, responsible for Sales, Marketing and Business Development. Heiko has been working in the software business for 16 years, with 13 years in different areas of the strategic purchasing market. He has excellent knowledge in procurement, supply management and risk management and has been successfully helping supply chain and procurement organizations implement solutions to increase performance, reduce costs and minimize risks.


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