Top 3 Takeaways from the SIG Fall Summit 2017
November 1, 2017
This fall edition of the 2017 Sourcing Industry Group’s (SIG) Global Summit was filled with insightful content focused on the latest in cutting edge strategies, solutions and issues that are impacting sourcing professionals’ ongoing quest to deliver both financial and non-financial value to their organizations.
Points of emphasis throughout the Summit sessions included creating value beyond cost savings, the importance of having an effective third party risk program, and the growing impact of technology on the profession.
Creating Value Beyond Cost Savings
This isn’t breaking news for the industry, but sourcing professionals have cost savings goals, and achieving year-on-year savings goals can become increasingly difficult as your suppliers can only withstand so much downward fee pressure before needing to evaluate the relationship going forward. When sourcing’s sole focus is cost savings, there is a real risk that a tremendous amount of value is being left on the table. There are creative ways in which sourcing professionals can add value to their organizations such as collaborating with your third parties to validate compliance with your executed agreements by ensuring internal and external stakeholder alignment, obtaining market intelligence, evaluating quality enhancements, and making investments that are mutually beneficial to both parties.
There are a wide array of opportunities beyond traditional levers to make the sourcing more effective and valuable to the organization. Taking the time to evaluate innovative opportunities while routinely asking ourselves what else we can be doing beyond the traditional sourcing techniques will go a long way in creating value beyond cost savings and having sourcing viewed as an agent of good by the organization.
Third-Party Risk Management
Organizations, regardless of the industry, rely heavily on third parties to execute their business strategies and achieve objectives. Undetected risks within these relationships can quickly create both significant financial and non-financial exposures. The risks associated with third parties are numerous and they can have a significant impact on regulatory compliance, operational performance, financial viability, information security, business continuity, and your organization’s reputation. Now more than ever it is absolutely critical that organizations have an effective third-party risk management program that is continuously evaluating and monitoring these relationships throughout their entire lifecycle:
- Due Diligence
- Ongoing Monitoring
In certain industries, having a third-party risk management program is not an option, rather it is a regulatory requirement. For example, The Federal Reserve Board (FRB), The Office of the Comptroller of the Currency (OCC), and The Federal Deposit Insurance Corporation (FDIC) have all issued guidance to Financial Services companies on how to manage third-party risks and the elements of an effective program. These regulatory bodies are ramping up examinations to ensure covered entities not only have a third-party risk management program but that they are sufficient in design and operating effectively.
Sourcing can play a key role in mitigating third-party risks by performing risk assessments on current and prospective third-party relationships, executing contracts with third parties designed to limit exposure, comparing activity between parties against the terms of the contract to validate compliance and control effectiveness, and collaborating with stakeholders on developing a strategy when it comes time to exit the relationship.
Technology’s Impact on the Sourcing Profession
Technology is advancing at breakneck speeds and transforming the landscape of business in ways that we have never seen before. Industry experts predict that sourcing will change more in the next 10 years than it has in the previous five decades. Robotic Process Automation (RPA), Artificial Intelligence (AI), machine learning, blockchain, and digitization are beginning to have substantial impacts on the way we do business. While these technologies are still being developed, refined, and optimized, future-focused organizations who seek to understand and harness the power of these technologies will gain significant efficiencies and have a distinct competitive advantage among their peers and competitors.
Partnering with The Coca-Cola Company
SC&H Group was fortunate enough to co-present at the Fall Summit with The Coca-Cola Company on the topic of contract compliance audits which touch on two of the themes mentioned above. In addition to identifying non-compliance and recouping financial leakage, contract compliance audits create value beyond cost savings and are also a critical element of a third party risk management program. In-depth audits of your third parties performance against your contracts also provides the following non-financial benefits:
- Increased accountability and transparency into the third party relationship
- Validation of contract compliance and control effectiveness
- Enhanced processes and contract language
- Improved communication and alignment between internal and external stakeholders
- Mitigation of risks through ongoing monitoring
When executed properly, contract compliance audits have proven to be a powerful tool for forward thinking sourcing professionals when it comes to managing relationships with third parties.
Overall, the SIG Fall Summit was invigorating and created a tremendous amount of dialogue about the future of the industry and the value leading-sourcing organizations can bring to the table.
If you’re looking for more insights into SC&H Group’s Contract Compliance Audit practice and how we are creating value beyond cost savings and enhancing third party risk management functions for our clients, click here to learn more or reach out directly today.