There's New Momentum afoot to minimize risk, forge a stronger supply chain

As more companies realize just how fragile the links in a global supply chain actually are, risk mitigation moves from a low-level to a high-level priority. “To cope with largely unpredictable events, leading companies make supply chain investments to ensure goods continue to flow despite major disruptions,” says Patrick Connaughton, senior analyst with Cambridge, Mass.

12/01/2007


As more companies realize just how fragile the links in a global supply chain actually are, risk mitigation moves from a low-level to a high-level priority.

“To cope with largely unpredictable events, leading companies make supply chain investments to ensure goods continue to flow despite major disruptions,” says Patrick Connaughton, senior analyst with Cambridge, Mass.-based Forrester Research .

Connaughton says leaders know the key to success is establishing day-to-day processes that can scale in times of crisis.

These best practices are said to offer the highest return:

  • Design networks for maximum resiliency;

  • Extend situational awareness to supplier and carrier networks; and

  • Boost prevention efforts by integrating better security measures.

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      Joe Stafford, executive VP of risk management solutions vendor New Momentum, says constant monitoring of buying, selling, and other market activity protects revenue streams and leads to stronger, more flexible supply chains. </td></tr></tbody></table>

      But supply chain risk mitigation doesn't necessarily stop there. For one, there's the inherent risk involved with sharing intellectual property (IP) with partners and suppliers.

      “To cut costs, many companies have moved manufacturing operations overseas. Now they are looking at ways to protect those revenue streams,” says Joe Stafford, executive VP of New Momentum , a vendor of supply chain risk management software that targets companies that either make or use electronic components. “One way is to take steps to protect IP from counterfeiters and detect sales through unauthorized channels, which can prevent lost revenue growth and brand reputation erosion.”

      But the problem, claims Joshua Greenbaum, principal for Berkeley, Calif.-based Enterprise Applications Consulting , is that tracking product loss through the gray market presents a classic needle-in-a-haystack scenario.

      “There's an enormous wealth of product-related data beyond a company's firewall that needs to be tracked and analyzed,” says Greenbaum. “Understanding this data can be a tremendous undertaking. The requirement to continuously monitor changing conditions makes the task that much more complex.”

      The solution for a growing number of companies is adoption of supply chain risk management software.

      According to Stu Clifton, CEO, New Momentum, “Our latest solution, introduced last summer, provides global enterprises with comprehensive capabilities for finding counterfeit components and unauthorized distribution. Most important, what we do is protect our customers' revenue streams.”

      The process begins when the customer supplies a list of part numbers to New Momentum. The on-demand solution then monitors constantly for email activity, as well as buying, selling, and other market activity concerning those part numbers. Next, New Momentum provides the customer with an alert that details the findings so the company can act accordingly.

      “That's our real strength: this type of constant monitoring and building on results,” Stafford says.

      That approach is of significant interest to Inventec , a Taiwan-based supplier of high-tech products including notebooks, enterprise servers, storage solutions, wireless communications, network applications, mobile devices, and wireless applications. Inventec will use the New Momentum solution to protect IP, and identify possible supply chain constraints before they become a problem, Stafford says.

      Given the many parts in its products, New Momentum will enable the manufacturer to monitor the market for movement of those parts, including whether prices for various commodities are rising or falling, and who's doing the buying and selling.

      “Interruptions in manufacturing can be very costly,” Stafford says. “Constantly monitoring the market will enable Inventec to—among other things—identify potential suppliers it could turn to in case its suppliers' commodity quantities dry up for some reason. The result is a stronger and more flexible supply chain.”



      SC risk, by the numbers

      New Momentu, a vendor of supply chain risk management software, offers these figures as a typical revenue loss for an electronics component manufacturer due to gray market activity:

      Annual company revenues: $900 million

      Product lines: four

      Product lines suspected of having gray market sales: one

      Annual revenue for this product line: $400 million

      Gray market availability: loss to the company of $24 million

      Company sales discounts due to gray market competition: $4 million



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