The Risk Is Always There: How to Get Ahead of Supply Disruption

some of us knew that there is a war in the horizon, but since some of us had a heads up or some of us could interpret that we need to plan ahead, they would have definitely had a head start. And that plays a very important role because all of this adds up to your top line and to your bottom line. On this episode of Executive Edge, Greg is joined by Subhash Chander, founder and CEO of The Simple, a next generation management consulting firm backed by former CXOs. Subhash shares what it actually takes to get ahead of supply chain risk in today's world and how AI is reshaping the way organizations monitor and respond to disruption.

Hello, and welcome to Tenzing's Executive Edge podcast. Our guest on this episode is a former colleague of mine who is an expert in market intelligence, Subhash Chander. Subhash is the founder and CEO of The Simple, a next generation management consulting firm backed by former C-level executives that leverages advanced analytics, modern research methodologies, and cutting edge tools to provide intelligence to their clients. Prior to The Simple, Subhash was leading the Smart Cube where he specialized in applying a combination of artificial intelligence and human intelligence to provide market intelligence to Fortune 500 companies.

Welcome, Subhash, and thank you for joining me today. Thank you, Greg. It's great to connect with you again. A lot of great memories and I really look forward to this podcast.

Yeah, this is our most technically challenging podcast so far, I think, because the distance between Subhash and I is basically halfway around the world, right? So he's in India today, I'm here in the States, and we're going to get started. And today we're going to talk about a subject I think that everyone's thinking about, and it always seems like it's topical, always for different reasons that it's topical, and that is supply risk, and specifically supply risk monitoring and management.

So the first question I have for you, Subhash, is when did it all start happening? When did supply risk monitoring become important to corporations? Right. Thank you, Greg.

I think it's the most pertinent question one can really ask in today's day and age. Let me begin by setting some context, right? If you take a step back and look at this slightly philosophically, you would conclude that the only certainty in this world is that there is actually no certainty at all. That very well applies to the world of risk monitoring, and within risk monitoring, the overall concept of supply risk monitoring.

If you take a step back and look at the last 25, 26 years, since early 2000, the world has been characterized by numerous events. We had a massive tsunami sometime in the early 2000, 2005, in Asia, followed by the Great Recession. Then you also had Brexit. You had numerous other events that characterized global economy, until we went ahead and ran into COVID, which was completely unparalleled, unmatched, and absolutely unprecedented.

Ever since then, procurement executives and senior leadership across different organizations have been looking at ensuring that they are able to secure supply, and that is very essential because that is how their operations keep running. Whether you're looking at a services company or a company in the consumer healthcare space or one of the leading pharmaceutical companies, securing supply has become a very important parameter or a KPI for organizations globally. Especially in the last four, five months, you're seeing even more of that.

2026 started with the continuation of the Russia-Ukraine crisis. We've had a couple of storms in the East Coast. We've had numerous challenges within different countries, like Japan had experienced numerous earthquakes. There was a recent domestic attack within Colombia.

Brazil has been experiencing a lot of flux. There is the recent Middle Eastern crisis. And you're also looking at a lot of economic sanctions slash challenges. Now, all of this is kind of putting the risk monitoring again on top of the pyramid for a lot of senior executives globally.

So when you actually take a step back and look at what has changed, it is the very fact that the world is getting characterized by numerous challenges. There is no guarantee that this won't happen or this will happen. And it is always important for individuals to be prepared for everything. And hence, the advent of risk monitoring is actually increasing by the day.

Right. I should note that while we're taping this, we're about 60 days into the Iran war that's going on. And the Strait of Hormuz is a daily topic of discussion. It's creating all sorts of supply shocks around the world, I think.

So that's sort of the timely risk of the day here now. But yeah, you rattled off a number of events that I certainly remember each and every one of those events and probably everybody who's come of age in that era would remember those events as well. And what's interesting is they're all different, right? Different things happen, different outcomes result from those.

So this monitoring, I understand, has become an importance. But what's the benefit if somebody comes to me to say, hey, I think you should do a better job, Greg, of monitoring the risk in your supply chain and setting up some protocols and some rapid actions that you can enable on some key ingredients or key products that you purchase, right, to put into your final goods that you're making, goods or services, whatever it is. What's the benefit statement that goes with that, right?

Because it certainly requires a lot of investment. And I look at it like insurance. And somebody once said to me, insurance is basically you're betting against yourself, right? So it's sort of hard to make that payment every month, but you know, it's the smart thing to do to protect one's families and whatnot.

But help me understand when you're talking to people about this, why should they make an investment? What are the benefits of that investment? So for any organization to survive, right, you buy different types of raw materials, you buy different types of services. Now, who are you buying from?

How are you buying that particular raw material service? In what volumes, quantities are you buying? It's becoming increasingly essential. If you don't get this DNA right, your top line as well as your bottom line goes for a toss.

So for any Fortune 500, Fortune 1000 company, or even a half a million dollar company that is sitting somewhere in the world, it is very important to understand where you are buying different products, different services from. Now, why is it becoming so important? The most important obvious thing is for your organization to sustain, you need different raw materials, you need different services to come in. And you don't only need different raw materials and services, but you also need it to be delivered in a timely manner.

You need the best of customer experience when you're looking at the entire supply. And in today's day and age, with so many events that are happening globally, with the advent of so many options that you have as a buyer of a product or a service, you might want to look at buying the products and services not only from any supplier, but from the best supplier while ensuring that the quality is not going for a toss. The entire supply is not going for a toss. You're also ensuring that it is continuous and it is delivered in the quality that you actually need, right?

So how can you have that particular visibility? It helps you manage your organization better. Two, if at all there is one learning that we've had ever since the pandemic, it's not a question of where is the risk coming from, it is the inherent nature of risk that risk is always present in today's AI driven economy. This could be from sanctions, the risk could be from a storm that is happening on the coast of the Atlantic Ocean.

The risk could be from a supplier breaking down. The more you are able to assess how these things are happening, understanding the rationale behind where and how these things are happening, how is it going to impact your organization, it adds tremendous value to how you can run your overall operations. So as you see, for your organization to run successfully, what you need is good supply. How do you actually monitor whether the supply is good, continuous, meeting the required SLAs that you've signed up for, so on and so forth.

Second, all of this is reactive, but can you also look at it from a forward-looking perspective so that you can better forecast how your business is run? Because it's not only about procurement or the supply chain team or the risk function managing the overall risk, it is inherent within every product that your organization takes to its end customer. So that is where I see the benefit of risk monitoring really increasing as we progress or we navigate through this AI-driven economy.

Right, okay. So clearly, if you don't have incoming raw materials or goods, whatever you're buying to produce your product, you're not going to have sales, right? So that's the most obvious, but you're sort of planning for a kind of edge situation, right? But I liked how you said it, the risk is always out there, right?

And you don't know necessarily where it's coming from. I think there are some indications, let's say the buildup to a war, right? People had a little bit of time to plan, but in many cases, it's something that just comes out of the blue. That could be a storm that brews up pretty quickly and takes out a factory somewhere.

Could be a fire, which you have no sort of advanced knowledge of that's coming, right? So what are some of the leading organizations that you work with and talk to? What are they doing? And it'd be interesting to know what they're doing differently, maybe in the age of AI.

You've mentioned AI a couple of times. It's a mandatory mention on the podcast now, right? We can't do it without saying it. So we have a minimum word count of 20 on AI, but in the age of AI, that's I'm sure opening some additional other opportunities to improve risk monitoring, risk management.

Tell us what some of the leading people that you work with today are, maybe in a sense of, what are they doing in a sense of maybe the whole supplier lifecycle from the time they select a supplier to when they're working with them and ultimately when they exit that supplier. So let's look at it this way, right? Before we kind of get into examples, what I've seen to a great extent, especially in the last two, three years is, one, clients want to do risk monitoring because you're looking at a list of strategic suppliers in your organization.

How well are they actually performing? Are there any risks that are hidden or that are inherent to the business that I as the procurement leadership team or the category manager should know? This law typically applies to the critical suppliers or the so-called strategic suppliers, which are running into a couple of hundreds. Then with the number of unprecedented events that have been happening since the pandemic, you also want to be even more proactive, even while onboarding a supplier or while running into the final stages of an RFP, can you do a due diligence or a detailed risk assessment of the supplier?

I have also seen organizations run a high level risk assessment even before starting an RFI with a few suppliers, which is something that is happening increasingly to a great extent. The third use case that we are really seeing is event-driven exercises, and that event-driven exercises can be broadly segmented into two buckets. Bucket one, it is an event at a country level or at a regional level, or it is driven by certain macroeconomic sanctions or tariffs or anti-dumping duties Brazil is kind of running through a lot of floods in the last one month.

In Colombia, there was a domestic violence two weeks back. How are organizations managing their supply base there? You spoke about the Strait of Hormuz. How is the Strait of Hormuz impacting nitrile gloves manufacturing, which is becoming an essential equipment within the larger personal protection equipment space for pharmaceutical companies, for consumer healthcare companies, for any production company out there.

Then the second type of event that you're looking at as a part of the event-related part is it's very company-specific. A company has not met its SLA. There is a new private equity investor on board. The company has been acquired.

The company has filed for bankruptcy or is showing signals that they are not delivering things on its own. You might want to identify the risk before a company files for a bankruptcy because this can actually impact your entire supply. So these are largely the different use cases that we are ideally seeing. Now, going to your question, what are some of the recent techniques that organizations are doing?

A majority of risk monitoring has always been reactive in nature. You're looking at historical data and you're taking a decision whether risk monitoring is essential, not essential. And when you deem it to be essential, you come to the final risk rating of the supplier and categorize the supplier as a low-risk supplier or a high-risk supplier, et cetera. But can you make risk monitoring forward-looking?

By looking at some of the historical data and predicting what are the different changes that are likely to happen in and around that particular supplier with respect to that particular category, that particular location, route of transport, especially when it is a direct material category, and understanding all the elements, nodes involved, is the risk likely to be same or is the risk likely to change in the next 6, 12, 18 months? Then you get into this entire concept called the next best action, which is something that we have introduced.

When you see a high risk or a low risk or a moderate risk projected in the next 6, 12, 18 months, what are you likely to do with that insight? As a leadership individual or as a consumer of those insights, what are some of the different decisions you can actually take to better manage and secure your supply? The LLMs have provided an opportunity for you to access the worldwide data very quickly. What you need is a human layer on top to ensure that the data points that you're able to collect are accurate and validated.

While we look at all external data, can we also look at the ocean of internal data that any client has? Now, can we marry the internal data with respect to that supplier and category with the external data on that particular supplier, category, location, and bring all that together to provide a forward-looking view? Yes. What I'm seeing being implemented by a lot more organizations in the recent past.

Because what every organization has concluded is the risk always exists. It's a question of not when or how, but it's a question of how the organization is going to react. The best example that comes to my mind is if you look at the entire laptop landscape, the traditional memory that's typically used by organizations or individuals are typically anywhere from an 8GB RAM to as high as a 32GB RAM. Even 32GB RAM is on the higher end.

Stakeholders typically use a 16GB RAM for normal desk-based work. Now, if you look at entire 2025, because of the demand for the servers in the AI space, there has been a tremendous shortage of RAM globally. Now, because of this, the memory prices have increased by more than 100% to 125% in the last, let's say, six to 12 months. Now, if you look at some of the leading laptop manufacturers or the service providers, like we typically buy from a Lenovo or a Dell or a HP, some of these players have gone ahead and secured their supply for 2025 without passing on the price rise to their end consumer, whereas others have gone ahead and kept trickling down the price rise to the supplier every now and then.

And I mean supplier, I'm referring to the end user here, end buyer. Now, as a buyer, if I see that the laptop prices are increasing all of a sudden, and they've increased by more than 50%, 75%, so on and so forth, because of different reasons, but the primary reason or 90% of the reason is attributed to the shortage of RAM memories, I start panicking, or I start looking at running an RFP, or I start looking at traditional methods to identify who are the alternative manufacturers and other different techniques to manage this challenge.

But what could have been a better approach is monitor the key suppliers that are actually supplying these product segments on an ongoing basis. It could be weekly, it could be monthly, it could be daily. For a category like the laptop, you don't need to look at it daily, it could be even monthly. Looking at what's happening in and around the supplier, what's happening in and around that particular category, is the supplier pretty much following the same trends as the category, and are our internal data points also reflecting to what's happening in the market, which is where the ingestion of internal data and external data comes in, and what does the forward-looking view look like?

We have seen numerous clients mitigate this very well, because they have planned things well in advance. So that's where I see organizations taking an edge. We are seeing a lot of organizations today who are looking at supplier risk, and they are not looking at supplier risk in isolation. They are marrying it with the category, they are marrying it with the location, they are marrying it with the node of transport, right?

They are marrying it with different other macroeconomic indicators that can impact that particular supplier, and that category, and that location, and the different node. And most importantly, they are segmenting this into external and internal data, and trying to collect that data on an ongoing basis, building that data lake, and running through your different algorithms and analysis on these data points. This way, you are able to have a forward-looking view. Now, when you have a forward-looking view, you might still run into the risk, but you are better prepared in terms of how you can actually reduce the total impact of the risk.

To your earlier point, some of us knew that there is a war in the horizon, but since some of us had a heads up, or some of us could interpret that we need to plan ahead, they would have definitely had a head start, right? And that plays a very important role because all of this adds up to your top line and to your bottom line. Right on, got it. So that was a lot.

I'm gonna dig into a few things there. You talked about even before an RFI goes out, there could be a screening, let's call it due diligence for risk ahead of that. What does that look like? Is that just a super light RFI?

Is the supplier submitting anything, or is it just a study of that supplier based on available public data? Yes, it's a very light, high-touch kind of an assessment where you do a quick scan of the supplier, assess some of the basic parameters, right? If it is a public company, can you do a quick financial assessment? If it's a private company, can you find out what is the best way to assess this particular organization?

Where exactly is the supplier located, right? What kind of information can you gather? It's a very high-level, high-touch assessment just to give you a sense that there are no red flags with the supplier. The question is not whether the supplier has high risk or low risk.

The question is, can you actually identify any red flags? And when I mean red flags, is there a director or someone on the board who's from a country where there are economic sanctions? Has the company in the last 12 months, 18 months, 24 months filed for bankruptcy, or has the company had a high amount of debt? Were they recently acquired three months back or six months back prior to us issuing the RFI?

What kind of indicators can we provide? Now, some of these could be red flags, some of these could be opportunities as well. It depends on how you assess all these parameters because the company getting acquired six months prior to us launching an RFI would be both an opportunity as well as the risk. So it's important for us to gather that information because that should play a very important role in your overall RFI assessment, right?

That way, you're not really spending a lot of time in running an RFI or following up with a supplier who has sanctions or is in a country where there are sanctions, or the company has had certain financial challenges, which is evident in the public domain. Most importantly, in the world of pharma, you don't want a scenario where the FDA has actually kind of inspected one of their plants and kind of imposed some sanctions. All these are kind of red flags, which a client should know before even issuing an RFI to that particular supplier.

Gotcha, okay. So then I want to move to the subject of identifying sort of the most critical suppliers. Everybody has hundreds, if not thousands, usually thousands of suppliers. When you look at who you spent money with in a given year, especially the bigger the corporation, the more that list grows.

I've seen people do it wrong in supply relationship management where they segmented by spend. You might spend a lot of money with an office supplies provider, but that's not really introducing a lot of risk to your business, right? If they go down, there's a competitor you can go to probably, you know, right next door and pick up the same stuff. But when these companies are looking at, I always encourage my clients to tie it to revenue.

Like how much of an impact can this supplier have on your revenue? They may not be a big spend, but they may provide some critical ingredient that, you know, you can't make your product without. I remember we go all the way back to your, one of your examples, the tsunami in Japan, and they couldn't paint cars certain colors. It was very limited because there was one supplier who had a critical ingredient that they couldn't get because the plant was flooded in the tsunami.

So when people are segmenting, is it typically driven by what could have the most impact on the top line, you know, products that the company's producing? No, I think that's a, I think you made a very pertinent point. The impact of the supplier on the top line is very, very essential. Sometimes whether the category is single-sourced or dual-sourced or do you have alternative suppliers is also a very important criteria.

The most important part is, as you said, more than looking at spend. Spend is just one indicator and it is not the only indicator. Can you define how critical the supplier is for running your entire operations? Is the most important parameter.

Because today, what we are ideally seeing is clients don't want to look at risk at a supplier level. They want to marry it to the revenue earned, which is the point that you actually made, right? So can you link the supplier to the business unit or the brand or the SKU that is getting sold to the end customer and define what is the total impact of this particular supplier on the brand or on the deal or on that particular region, right? Before you come to a conclusion that this supplier is very critical, right?

I'll give you another example here, right? So we were recently working with a client of ours. The best part there was we started off, you know, this is very traditional, right? We started off with a spend queue.

We came to, you know, identifying some of the most important and critical suppliers from the spend queue. And then we kind of helped the client build the supplier segmentation metrics. And then we helped the client define based on different parameters because the client had a couple of sites in Europe, the client had a couple of sites in North America and in South America. So we had to take into consideration all of that and their business was very unique.

So we not only help them build the supplier relationships, the supplier segmentation metrics, but we also help them define the critical suppliers and the categories. And that does not mean the other suppliers are not critical and you can just let them be because this has to be holistic at a company level. And hence, for your traditional office supplies, can you kind of take a slightly high-level approach of risk monitoring and not really having ongoing risk monitoring? Whereas for your most critical supplier, can you look at some kind of an ongoing monitoring with some deep dive analysis on certain topics as well?

It's how you're pretty much defining it. So linking it to the end user, thereby to the revenue, I think is the new paradigm. And the more we do it, it clearly shows the importance of this entire risk monitoring as you kind of navigate in today's day and age. Right.

You're taking me back. You're opening up some boxes in my mind that have been closed for a while, but a while back I ran a software company we sold exclusively to discrete manufacturers who we were helping them really optimize their bill of materials for their products for cost. Of course, you had to have the cost of the purchase components in line in order to make it at target cost, right? When you add it in manufacturing, but we also provided the ability to kind of understand the supply risk associated with each of the suppliers in that bill of material.

And we also gave them the ability to look at how many bills of material or how many products do we make that that supplier has a component in or a raw material in, right? So you got a sense of, if that supplier went away tomorrow and stopped shipping to us, how many of our products would be, you know, dried up as soon as we pulled down the inventory we had. And customers found that incredibly valuable. And I was kind of astounded at first that they didn't look at it from that perspective, right?

And we also found them sub-optimizing supply choices sometimes to try to hit target costs for one item in a BOM instead of looking at the BOM as a portfolio, but that's a whole nother, that's another podcast. But, you know, that to me is sort of, that's where you have to find it, is where, you know, some people might think, oh, that supplier provides something for this product. You might find out they supply it for 10 different products, right? And wow, that could be impactful if they have a problem.

Even if it's not a physical problem, if it's a bankruptcy or something that prevents them from producing parts for you, you could be in big trouble really fast if they went out of business. So I like the way you spoke about that. And then, you know, you talked about it, I think I'm touching on it there, but you talked about marrying external data with internal data. And a mutual friend of ours, Omar Abdullah, would say context.

You need to put the risk in the context of the business. So maybe talk about that or give me an example of how do you marry internal data? I just gave an example of bill of material to external data, right, that supplier. But is there other ways where you're putting it in context?

Because that part, that's a nuance that I don't think everybody appreciates. Absolutely. In fact, if you ask me, the internal data is more powerful than the external data because you know what are the different challenges that you run in as an organization on an ongoing basis whenever an event happens, right? And especially with the advent of all these LLMs, you're able to gather external data, which might not be highly and super validated, but at least it gives you a headstart, right?

It might be 20, 30% accurate, but it'll give you a headstart, right? And then while bringing it together with internal data, it becomes a very powerful tool, right? The reason why I'm speaking about internal data is for any organization, right? You, even the least mature of the procurement organizations, you typically have internal data in terms of the invoicing data, in terms of some kind of spend data coming in some format or the other, right?

For all you know, it would still be stored in prehistoric Excel sheets, or maybe some kind of prehistoric ERP platforms as well, right? How can I use some of that data to kind of assess how many times I place an order with this particular supplier? What volume am I actually looking at, right? Am I using the same payment terms with almost all my suppliers, or is it actually very different, right?

And there are numerous metrics like this that a client can actually look at. Now, when you get all these metrics, you're getting a very good view of how your spend is structured, which are the suppliers you're actually buying from, and what kind of challenges have you ran in without looking at any external data? For example, you're not looking at whether there is a tsunami or whether the supplier had financial obligations or high debt, nothing at all. But what you're looking at is purely assessing the supplier in isolation, whether the supplier has supplied the product to you on time, has the invoice been raised correctly?

Has the value raised on the invoice and the contract? Is it actually matching? How often does the supplier provide after service whenever you run into any kind of challenge? Is the supplier following all ethical standards of production?

No child labor, no unethical practices, or unregulated carbon emissions, so on and so forth. Now, when you get a sense of all of this, because you have collected some or most of this information when you have onboarded the supplier, or when you went ahead and signed a contract with that particular supplier, can you use this data and marry it with external data that is continuously evolving even faster than your internal data? Because your internal data will only evolve depending on the number of transactions you have with your supplier.

It could be the number of times the supplier is delivering products or services to your facility, or maybe it's some kind of a Microsoft license which is continuously up and running. What kind of challenges are you running there? Are there any data points that you can actually extract from here? Marry it with the external intelligence, and that's where it becomes a very powerful tool.

Because if you look at this only from external parameters, you will get a great overview of what's happening at a category level, what's happening at a geography level. But they might not be relevant to your organization at all, because you are handling it in a completely different way, right? Classic example, you have suppliers located within Japan. The Japanese government announced that there was a series of small, low-end tsunamis that happened in the first week or second week of April.

No supplier has got impacted because all your suppliers are within the inland region. The Japanese government comes and announced that there is going to be even a large-scale tsunami likely to happen in the next two weeks. As a client, can you immediately look at some of your internal data? How much inventory do you have?

Is it single source, dual source? What kind of SLAs are you looking at? Are there already alternative suppliers that are available for qualification, right? If not, does the risk increase?

Then marry it with all these insights that's coming out from external sources to evaluate how you can actually better manage the situation. Okay, gotcha. Yeah, and I think about another way to sort of proactively monitor, right? If you're looking at, let's say you have OTIF data on time in full for your supplier, and you start to see them maybe falter on that performance, and hopefully you're managing that and having a conversation with them about what's going on with OTIF, and you're dealing with it.

But if you marry that data with some external data that said that they're having some sort of maybe labor issues or something at their factory, right? Where that's coming from, you kind of say, hey, I'm seeing external reports of labor issues here. I'm seeing my OTIF drop. What's up, right?

Do we need to find a plan B here? Do we need to ramp up with our alternate supplier? Because something's clearly going the wrong direction for us there, right? So that's another example I would think of.

Is that a valid example? No, absolutely, Greg. I think it's not how exhaustive your internal data is. You can always build on what parameters you're able to capture, because you see organizations at both ends of the spectrum.

An organization monitoring and capturing every piece of activity that happens internally from a supply standpoint, and hence all of that becomes your different data, which is getting further converted into KPIs. Whereas there's another organization on the other end, which is actually not monitoring 90% of the things that they're ideally doing, and they're all lying in different Excel sheets, different PDF files, and traditional ERP systems. How can you bring all of this together?

So the idea should be to start small. It need not be that you already have an exhaustive list of parameters to better manage the situation, but can you take even baby steps to go forward and manage this? Will be the most important way in terms of how I would look at it. Right, right, super.

Okay, so maybe the last part of the conversation here, which is, this has been great. What are, you talked about best actions to take in response to supply risk. So what are clients and corporations out there doing to prepare for disruptions? Are they building action plans and that they kick in when things, you know, when they need to kick in, right?

It could be an immediate, it could be a trending metric or KPI you're following and saying, look, when they have four months in a row with OTIF below 90%, you know, we're gonna pull this plan. Give me an idea. I'm making stuff up, but you've probably seen some real things out there. So I wanna hear what you're, what you've seen.

What are they doing? Yeah, in fact, what I've seen is there is a lot of scenario analysis happening within organizations right now. Like even as simple as you look at some of the most basic parameters that are out there. Okay, the crude oil prices are oscillating between 60 and $70 and they're likely to touch 100 to $120.

Now what happens if it touches $100? What happens if it touches $120? What happens if it touches $140? What are some of the implications that will be there from a manufacturing standpoint for an organization like us where a lot of our raw material prices, our COGS is linked to how energy prices actually move, right?

The second thing that we are also seeing is clients are also looking inward in terms of, okay, these are some of the challenges that are out there. Can we proactively pre-qualify suppliers in case if there are challenges? We might not be buying from them right now, but can we go ahead and proactively pre-qualify suppliers? Are our categories dual sourced?

If they're not dual sourced, what kind of steps should we take from a governance standpoint with the supplier? Can we do that extra due diligence? Do we know whether the supplier has an exhaustive DCP in place? Can we have our audit team audit the supplier's DCP protocol?

Who are some of the clients that the supplier is actually working with? What are some of the challenges that we are likely to run into? Because this is happening almost especially in the world of pharma where qualifying suppliers is something that's definitely a long-term process compared to the example that you gave where in terms of office supplies where it's kind of quite easy, right? The question is not about whether it is easy or not.

The question is about the criticality of how you go about in managing it because office supplies could be even managed at a location level. Whereas when you're buying an API, you might want the same API to be distributed to your three different plants from the same supplier located and you would want your supplier to also be GMP certified, FDA certified and other parameters that are involved, right? So can you look inwards, dual source, the criticality of the supplier? Some categories have not been dual sourced.

What are some of the steps that we should identify? How can the business stakeholder, the procurement team partner with the supplier, collaborate with the supplier? Can we kind of fund some of their initiatives? Can we help them give higher visibility in terms of how we are going to place orders with them, right?

So we see that collaboration really increasing, which is where the supplier relationship management is taking very high precedence, especially in the last two, three years because the pandemic has really changed the needle, right? So that's one key thing that we are ideally seeing. The other thing that we are also seeing is, especially in this tariff landscape, almost every client has looked at identifying alternative suppliers proactively. They have gone ahead and identified alternative routes.

They are working very transparently with the supplier such that the supplier is also winning and the client is also winning. The clauses in the MSA are protecting both the supplier and the client, right? We have seen numerous cases where clients have kind of lost track of how much they should be paying the US ITC in terms of the tariffs that are typically involved because the tariffs have changed so much within a period of a week or two, right? So these are some of the challenges that organizations are running into, but some overall internal data management perspective, you're looking at, you're starting with the most basic data in terms of how much are you buying?

What is the spend associated? How critical is that particular supplier? Are you single source? Are you dual source?

Can we link the brand or the DU to that particular supplier? How can we actually do it? What is the entire mode of transport? These are some of the parameters that we are really seeing for various.

Okay, gotcha. Yeah, so that's a couple of great examples there. Yeah, I think a lot of this comes down to maybe doing a lot of work in preparation that you never have to really call into play, right? Absolutely.

That's the challenging part, so yeah. Right, because it's like I'm working on things that we may never have to do, but we better be ready because it would be catastrophic if this would happen, right? But yeah, that's where it's always tough to sort of get the budget for that type of activity, right? Because it's, you're really, again, paying for insurance by doing that work rather than just hoping for the best, right?

But I think the most prepared people are the ones that are gonna be better off, obviously. But there's a balance, right? You can, just like everything in life, you can over-prepare and probably over-spend to over-prepare and run a zillion scenarios. You can do something really crazy like have a whole bunch of inventory that you sit on.

It actually reminds me, I remember a chemical client we had back in the day, and they had hurricane stock. It wasn't safety stock, it wasn't cycle stock, it was hurricane stock inventory. And we were like, wow, you really keep a lot of it, and then a hurricane hit the Gulf Coast, and they said, that's why we do that, right? So there they made a business decision to tie up that much working capital because the downside risk was so high if they would lose control of that.

So yeah, so I think it's finding that balance is what's the right amount of monitoring, what's the right amount of preparation is key here, right? And try to optimize for that. Yeah, absolutely. In fact, Greg, the only point I would add is I don't think there is one right way or one shoe fits all approach at all because today, day and age, you don't want to just go out there and subscribe to a platform.

What you would want to do is, there is already a lot of noise out there. You want to cut through the clutter and curate information that meets your category taxonomy, that meets how your organization is structured, that meets how the maturity of your category managers, the maturity of your overall organization, what kind of end users are out there, what are the different brands, and then decide how do you want to go about in monitoring it because this is the most important use case that we're talking about in risk monitoring.

This entire aspect of identifying whether it's very easy to say that you have 500 suppliers and let's do daily monitoring or near real-time monitoring of these suppliers, right? But is it going to add value or do you want to look at it slightly differently, right? In terms of this is how your organization is structured. These are your top countries.

These are your top suppliers. These are your top reasons. And you don't need to look at all 500 on a near real-time basis. Instead, look at category level information or you look at these parameters before you come to a conclusion on whether you want to look at it on an ongoing basis.

This part, if organizations get it right, then you actually solved most of the challenges that you're likely to run into, right? Because the risk is always existing. It's not a question of how, but it's a question of when it is going to hit you, as you pointed out for your hurricane stocks. But if you do this assessment well, you are in fact better prepared.

Okay. So the last question I want to ask you about this topic is AI related. And where do you see AI being applied to make risk monitoring and risk management of suppliers more effective? Yeah, I think there are a couple of use cases, right?

I think the most important thing I would definitely call out is as much as we rely on AI, having the human in the loop or having a specialist on top to look at and curate the data, validate the data is very, very essential because what we are hearing and what we are seeing to a great extent is most of these LLM models, similar to humans are hallucinating beyond a point, right? And you would want to really avoid that because you're looking at managing the entire top line and the bottom line of your organization by looking at risk monitoring.

Now, if I have to look at specific examples, the entire concept of information collection from external sources has really been fast-tracked to a great extent thanks to the LLMs. Second, analyzing some of these events that are happening globally, whether it is the Brazilian floods or whether it is the sanctions on a specific country or the state of form of going for a toss or the series of earthquakes that have happened in Japan. Can we analyze some of these situations, marry some of this internal data with external data?

Can we actually develop agents to develop alerts and kind of have a stage-gated approach before that information actually comes to you? Are some of the use cases that we are ideally seeing, but the most important use case that we have seen to a great extent is on the data collection part, is on the alerts that are being developed to a great extent to your category managers, to your organizations. And when I mean alerts, I'm looking at, okay, there is a news event that has happened.

Can your AI agent not only give that event as an alert, but also marry it with your category, your location, and kind of provide an initial snippet that at least makes you look at it. And then you look at what are the different steps that you can identify. Since risk monitoring is a very critical function, AI agents and AI tools are very essential, but adding the human layer on top is what is going to make it even more powerful. Sure.

Okay, we still need the human. That's good news. That's good news. Absolutely.

For both of us as well. So like many AI use cases, maybe the best way to look at it is AI is my wingman, right? My assistant, my coworker, my partner in crime, so to speak, right? In doing this work.

So it's going to help me do some things more efficiently. It's going to help me do things more effectively, but you still need a human in the loop there to interpret what it's telling you, to make judgment decisions, to bring context and nuance into those decisions, I believe. Right? Absolutely, absolutely.

Spot on. Spot on in terms of your assessment as well. Yeah. If you're listening to this podcast, you wouldn't appreciate this, but if you're watching, I know when I'm right because Subhash's smile grows when I'm on the right track.

This is something I've learned to measure through many working with him for a number of years back in the day. So it's great to see that. And now I'm smiling, but I'm not smiling because we're at the end, but I'm smiling because it's been a great conversation. And I really appreciate you joining me on the pod today.

Subhash, it's been really cool to talk about this. I think you know more about market intelligence, or you've forgotten more about market intelligence than most people would ever remember. You certainly are one of the experts I go to when I want to know about, you know, what's going on in this space, and you've demonstrated that expertise here. So thank you so much for staying up late tonight and spending some time with me.

Thank you, Greg. It was a pleasure talking to you, and I look forward to continuing this conversation with you. Absolutely. So until next time, I want to say goodbye and thank you.

And, you know, we'll see how things go. I think we're in the middle of one of the biggest risk situations right now, supply-wise, anything that's tied to petroleum. So it'll be interesting to see how things play out. Hopefully this will be resolved before long and we'll get back to somewhat of a normal situation.

But like you said, I think the best thing I take away from this, that risk is always out there. It's just a matter of when it rears its head. So you got to be ready. Absolutely, absolutely.

Great, buddy. All right, until next time, take care and goodbye. Thank you.