In this Experian Business Chat we turn our attention to the record flood of new businesses getting started and, the need for credit grantors to evaluate credit applicants with greater speed and precision. To help us understand how that job gets done, we invited Product Director Greg Carmean to join us. Greg leads product development related to our partnership with Small Business Financial Exchange, so we met to talk about our partnership,  and how our focus on innovation is enabling emerging businesses to succeed while giving lenders greater ability to identify and respond to risk. What follows is a lightly edited transcript of our discussion. [Gary]: So Greg, with so many new businesses entering the market, one of the things that we hear often from clients is a need for a better view of their customers, to more accurately assess risk. How is Experian innovating for small business service lenders in that regard? [Greg]: Well, Gary innovation starts with the best possible raw materials, and in our business that's data. So it really starts with our focus on obtaining credible information on both businesses and business owners from Experian and then also supplementing that with information coming from the Small Business Financial Exchange, which is considered the gold standard in lender data. We take that data through a data quality process, which is part of the innovation. We call it our Data Foundry, which really makes sure that we're operating in the cleanest version of the data we possibly can. And then we apply our analytical techniques to provide the most predictive outcomes for our clients so that they can create the most tailored treatment for their small business customers. Finally, we provide platforms that enable not only list distribution, especially as we become so much more focused on the digital economy since the onset of the pandemic, but also platforms that are analytic in nature so that our client's data scientists can work with the data in formulating the best possible strategies for the business. [Gary]: That's great. So Greg, what can lenders do to improve decision-making across the customer life cycle and how important is it to see business credit risk over time and how can that be viewed by a lender? [Greg]: Gary, what we found is that the trends in the data are tremendously predictive in the risk outcomes that our clients are trying to predict. We've known this for some time on the consumer side of our business, as we've had trended attributes there for many years. What we've done now with the SBFE program at Experian is we've developed our V3 attributes, which are trended, and this trend in nature, not only allows you to see the static view of where a business attribute is at a point in time but at how the business attribute got there. Is the business improving in credit quality, are they declining in credit quality? And that is tremendously powerful when you incorporate those types of attributes into scores. [Gary]: So trended attributes,  they sound powerful, can you discuss the use of some of the different types of attributes? [Greg]: Sure. Gary. So in addition to the trended nature of our V3 attributes, we've also incorporated a variety of different specialty attributes. For instance, how do businesses perform on government funding programs like SBA loans and the PPP program? How can I understand how a business is going to operate under forbearance programs? And also how could I potentially do things like reject inferencing to see if I'm leaving accounts on the table. These are all elements that we've worked into this V3 version that can further help our clients refine their strategies and get the best business outcomes. [Gary]: So how do lenders manage accounts once they're found and, and handle regulatory changes across the account mix? [Greg]: Well, Gary, one of the most impactful things that we've done through the SBFE program is really focused on what we call machine-learned models, and machine learning, I think most people are familiar with, it's the notion that a model can continuously take in additional data and learn over time. But when it comes to regulatory compliance, that can be challenging because the model isn't very stable. So what we've done is we've adopted a strategy where we use all the machine learning techniques right up until the time the model is deployed, at which time it becomes static. What that allows us to do is create a model that has, as an example, consistent adverse action codes that will come out of it, which is tremendously important for regulatory compliance. Another element is making sure that the model is transparent so that a regulator can understand at a human level, how we get from the input to the decision. With our approach to these machine-learned models, we've been able to accomplish that and the results have been tremendous for our clients. [Gary]: So you lead product development related to our partnership with the Small Business Financial Exchange. Can you speak to how these solutions benefit SBFE members and empower small businesses? [Greg]: Absolutely. Both SBFE and Experian are committed to empowering small business growth. And we do that by placing powerful tools in the hands of our clients who are SBFE members so that they can put the small business that they're dealing with into the right product at the right terms. The second thing is as they are managing those accounts, our tools really help them identify risk earlier, which allows them to intervene more proactively. And that can really make the difference in a small business account that can be maintained versus one that might go to charge off. [Gary]: Well, Greg, this has been very insightful. It sounds like we've got a lot going on to benefit both small business service lenders and the businesses they're serving. Thanks for coming on and sharing your insights. Take the next step If this chat raised your curiosity about Small Business Financial Exchange attributes for small business lending, consider watching the recording of our webinar titled "Disruptive Strategies to Empower Small Business Lending" Experian/SBFE Analytical Insights Webinar

Experian has just released our Summer 2022 Beyond the Trends report. As I did the analysis for this release I imagined the crack of a starter pistol for the start of an intense race.

Experian and Oxford Economics have just released the Q1 2022 Main Street report, a window into the credit performance of small businesses complete with macroeconomic analysis. Highlights: The US economy contracted in Q1 for the first time since the pandemic-driven recession ended, but the domestic economy showed resilience in the face of Omicron, lingering supply constraints, and high inflation. Delinquency rates rose across the term periods; the 90+ days past due (DPD) climbed to 0.9 percent. Looking ahead, intensifying headwinds from more aggressive Fed tightening and tighter financial conditions will slow activity this year without stalling it. Download Q1 2022 Report Watch the Quarterly Business Credit Review Webinar Hear the experts from Experian and the lead economist from Oxford Economics unpack the latest Main Street Report. Watch the Quarterly Business Credit Review

Experian analysts look at data each week on the millions of U.S small businesses in our database and discover actionable insights that benefit our clients. They deliver these insights through the bi-weekly Commercial Pulse Report, providing a directional update on small business credit. The Commercial Pulse Report delivers a quick read on COVID market impacts, high-level credit trends, score and attribute impacts, and other market related activities. We just released an update to the Commercial Pulse Report, here are a few highlights.

  We have exciting news about the Experian Main Street Report and Quarterly Business Credit Review webinars. Starting with our Q1 report, set to release later this month, Experian will partner with Oxford Economics on the co-authoring of the report and presentation of insights in the Quarterly Business Credit Review webinar. You are invited to attend! We expect to release our Q1 report in the final week of May. If you are not already subscribed to thought leadership updates, be sure to sign up for updates on our Commercial Insights Hub. Mark Your Calendar Quarterly Business Credit Review Webinar Date: Wednesday, June 1st, 2022 Time: 10:00 a.m. (Pacific), 1:00 p.m. (Eastern) Why you should attend: Leading Experts on Commercial and Macro-Economic Trends Credit insights and trends on 30+ Million active businesses Ask our panel questions in real-time Industry Hot Topics Covered (Inclusive of Business Owner and Small Business Data) Commercial Insights you cannot get anywhere else Peer Insights with Interactive Polls (Participate) Discover and understand small business trends to make informed decisions Actionable takeaways based on recent credit performance Watch Recording

  We start this post off with the words of a song from the great Bobby Dylan, who we've loved for so long. Come gather 'round people, wherever you roam And admit that the waters around you have grown And accept it that soon, you'll be drenched to the bone If your time to you is worth saving And you better start swimmin' Or you'll sink like a stone For the times they are a-changing For any B2B marketer worth their salt, you realize the times indeed are a-changin', and with them, the way businesses must market themselves to be successful. As a result, big tech companies have started to buckle down on cross-browser tracking, email delivery tracking, ad targeting, and other changes that will keep marketers on their toes for the near term. This post focuses on the two most talked about marketing changes, the elimination of third-party browser cookies and Apple's iOS 15 privacy protection measures. It's no time to panic, though; it's a time to embrace change and double down on a first-party data strategy. Think of first-party data as an old friend that carries your marketing forward, starting with straight talk about your penchant for cookies. Marketers go cold turkey on cookies Cookies have been helping marketers for years, and I'm not talking about oatmeal-raisin, chocolate chip, or even snickerdoodles. No, I'm talking about the tiny bits of code that websites leave on a visitor's browser. Cookies offer websites and apps an opportunity for personalization, remembering user login info or preferences. Still, there are different cookies, and one particular cookie, dear reader, has a limited shelf life. What's the difference between first-party and third-party cookies? First-party Cookies:  First-party cookies help provide a good user experience by collecting customer analytics data, remembering language settings, and carrying out other functions. First-party cookies work with your website, and these cookies are sticking around.  Third-party Cookies:  Now considered in their end-of-life stage, third-party cookies track website visitors. Third-party cookies can track how people interact with a website. They can be placed on your computer or mobile device without any user input, making it easy for advertisers and other third parties to access the information about you that they need to make ads more personalized based on this data. Google announced in January 2020 that it would overhaul the Chrome browser by removing third-party cookies to prevent advertisers from following people around the web. Firefox started blocking third-party cookies by default in 2019. But, again, first-party cookies are not going away. For years marketers have exploited cookies as a standard practice to keep track of their customers' browsing activity. Retention marketing, in particular, is a strategy that relies on data from across various sites or apps where users have engaged with content-related advertising. So it's essential to be aware and stand out as someone worth reaching back to! Ad-serving is another area where cookies play a role, deciding when to show ads on websites, what type, and how much information they should collect for advertisers to know their performance. How elimination of third-party cookies emphasizes the importance of first-party data The elimination of third-party cookies will make it essential for all marketers to start collecting and analyzing first-party data on website visitors, so you can tailor and personalize experiences without relying on third-party data. "It will not be the end of the world for marketing, but you will need to change," said Thy Phan, Senior Product Manager with Experian, "in a post-third-party cookie world, marketers will use other tools to accomplish the same things. For example, Experian's U.S. Business Database contains commercial marketing attributes that can help marketers fill in any gaps in first-party data for personalization." What the Experts are saying about first-party data “I am a big advocate of first-party data. I advise my clients to analyze their own data first. However, they can use 3-party data to "clean" or "enrich" their datasets to get additional insight. The prerequisite of using first-party data effectively is the quality of your data.” Pam Didner B2B Marketing Consultant | Author | Speaker www.pamddiner.com Create better experiences for your website visitors One way to head off a drop-off in marketing campaign performance is to collect more first-party data by asking your web users to opt-in to data collection or tracking tools like cookies and pixels. Then, when you have a lot of first-party data, you can create detailed customer profiles to understand your target audience's needs better. One way Experian clients can target business owners is through C2B Linkage data. "If you are targeting business owners, Experian's C2B linkage data can help create a holistic view of customers without relying on third-party data. With the elimination of third-party cookies, and this inability to track users online, marketers can employ analytics and use that data to run models which analyze web visitor behavior as a component of the model to inform when prospects are "In-Market."" Thy Phan Senior Product Manager Experian The ideal clients who can really leverage C2B linkage are companies with both consumer and business portfolios, such as Rewards/Loyalty programs, Financial Institutions, and Insurance. C2B Linkage Service is a non-regulated marketing solution offered by Experian Business Information Services that enables our clients to associate consumers within their existing portfolio to a business based on Experian's commercial database. With this Linkage our clients can segment linked accounts by firmographic and commercial credit attributes. Three things to remember about C2B Linkage Contact decision-makers across multiple channels (business and personal). Cross Sell/Up-sell: For example, Tony has a personal credit card and he's using it to fund his business. He goes online to look up his balance, and views a personalized note: "Tony- You may be interested in our Business Credit Cards so that you can track your business expenses separately from your personal ones. And earn rewards on your business purchases." The site can run a blended prequalification campaign that uses consumer and commercial credit data to find credit products for the customer. The prequalification criteria can be a combination of consumer and commercial scores and attributes as a select or suppression criteria to improve conversion and maximize your ROI. How to generate more first-party data When designing your email campaigns, you should craft messaging that gets users to click and engage. Doing this will generate that first-party data from your website that signals engagement. You can segment this audience for further action by monitoring the success of these campaigns by focusing on click rate vs. the open rate. Best practice ensures that email content motivates people to click. In this case, you withhold the more valuable content from appearing in the body of your message but include a clear and compelling call to action button to inspire the click. That content can be an article on your blog or a landing page on your website. Apple iOS 15 puts additional hurdles in place for marketers The Apple Mail app is one of the most popular mail clients because of its ubiquity with popular Apple iPhones. It is a default mail client on these devices and accounts for roughly 52 percent of all emails opened, according to Litmus. For marketers who have a lot of Apple users in their email database, the iOS 15 changes will be more meaningful, so here's a quick primer on what Apple has put in place and how marketers can respond. In September of 2021, in a move to protect user privacy, Apple's iOS 15 introduced two key Privacy Protection features: Allow Apps to Request to Track Mail Privacy Protection Allow Apps to Request to Track Located under the privacy setting "Allow Apps to Request to Track" option allows apps to ask to track your activity across other companies' apps and websites. All new app tracking requests are automatically denied when this is turned off. Mail Privacy Protection Located under email settings, Mail Privacy Protection works by hiding a user's IP address and loading remote content privately in the background, even when your email targets don't open the message. This change makes it harder for marketers to follow email activity. Since Apple rolled iOS 15 out, nearly all users have taken advantage and blocked ads from tracking them without their knowledge or consent. This has heavily impacted marketers. So, what does this mean for marketers? According to email provider Constant Contact: Open rates are increasing but are no longer reliable Click-to-open rates are likely decreasing, but they are also unreliable Open-rate-powered email automation features have become less reliable Open-rates The old way of tracking email is no longer reliable, so it's hard to say how many people have opened your message. However, Apple now loads all data into the system regardless if a user clicked on an image or opened their inbox – this could mean higher open rates for you. Still, these metrics are no longer reliable for Apple iOS 15 users with this feature enabled. Click-to-open rates (CTOR) When you click on an email, it takes you directly to the page? That's called a "click-to-open." The click-to-open rate is the number of unique clicks your emails get divided by how many people opened them. If 100% of those who saw this message clicked through, we would have a 100/0 Ratio. CTOR was an interesting way to measure how much time people spent on their email, but this has changed with Apple's recent privacy changes. The new measures mean the fraction of emails opened gets biased because some will now be answered. Others won't need as long of a hangout period before they're reread by customers – meaning you can no longer rely solely upon CTOR as your metric! Open-rate-powered automation The email marketing world is competitive, and many marketers use open data to segment their lists into "most engaged" or "least involved." However, this practice is replaced mainly by unreliable click-through rates (CTR) as an effective way of determining who your most interested subscribers are – because people don't always read what they've clicked on. Automation strategies such as resending to non-openers will no longer work well because Apple Mail users will now show as having opened every email and thus will not receive the automatic send. "Use open rate as an observational tool; use it as one datapoint in the whole story, rather than a decision point," Thy Phan recommends. Three things to remember about email marketing Keep it clean with Data hygiene — while it will be challenging to measure opens, you can ensure that the emails are being delivered to real people. Create Segmentation and Focus. Instead of using cookie data, use marketing lead data and credit data for deep analytics on segmentation, look-alike analysis, intent, and custom models to personalized emails that speak to the intended audience. Focus more on clicks and conversions. Things to keep in mind in these changin' times Take stock of how you measure success. The goal should always go beyond opens and clicks when determining how successful your email marketing campaign has been. Even though click rates are still reliable, they shouldn't hold all the weight regarding what metrics you look at going forward – because there's more than one factor at play here! If you don't have the expertise to run effective campaigns today, now is a great time to engage with Experian for help with marketing. We can help you build a profile of your visitors and responders — enhance your email records with corresponding postal addresses, contact details, and firmographics to improve segmentation so you can execute multichannel strategies. If you want to expand relationships with business owners in your customer base, we can help you form linkages to business owners through B2C Linkage. Despite these winds of change, marketers still have plenty of options available to strike the right chord with their customers while respecting privacy measures. So it's not time to hoist the white flag of surrender just yet, friends, the seeds of opportunity are all around us, blowin in the wind. Contact Experian for Business Marketing Solutions

Women-owned small businesses make up roughly 34 percent of new business starts. They are among the businesses most heavily impacted by the pandemic, and minority-owned women-led small businesses were the fastest-growing segment coming out of COVID. Despite solid growth, Women business owners face significant barriers to success. We studied a large dataset of women-owned small businesses to understand their unique needs and challenges. The result is a fascinating look at a powerful small business segment. In this talk you will learn: · Credit behaviors · Top industry sectors · Areas of opportunity for lenders Watch Recording

We've all been experiencing higher prices for food, housing, and certainly at the gasoline pump. If these economic headwinds have  raised concerns about how small businesses are being impacted, we have some fresh perspectives in the Spring 2022 Beyond the Trends report. Beyond The Trends offers a unique view of the small business economy based on what we see in the data. With up to date information on over 25 million active businesses and how they perform from a credit standpoint. Here’s my quick take on what’s in our latest Beyond The Trends Report The next 12 months will be filled with headwinds and mines for small businesses. These entities have been shoring up resources, operations, building in cost increases, and creating backup supplier networks as supply chain disruption and inflation will batter the ship through 2023. Highlights: Consumers seek higher paying jobs, creating labor shortages in blue collar industries, as wage gains are being eaten away by increasing U.S. inflation. Transportation and the utility industries have seen a 69% increase in delinquent balances tied closely to the increase in U.S. inflation. A 4X increase in delinquent balances associated with mining as the US took steps to move away from fossil fuel. Commercial card lending grew 9.9% in the 4th quarter, even as delinquency rates began their upward climb. Energy Takes Center Stage Energy costs are hitting margins and impacting delivery of goods and services. US energy costs  were up 27% in January according to the Bureau of Labor and Statistics. These costs have been rising sharply since March 2021 and will be exacerbated in the 1st quarter 2022 by global reaction to the Russian incursion in Ukraine. Energy supply chains will be disrupted by sanctions and higher transport costs. !function(e,i,n,s){var t="InfogramEmbeds",d=e.getElementsByTagName("script")[0];if(window[t]&&window[t].initialized)window[t].process&&window[t].process();else if(!e.getElementById(n)){var o=e.createElement("script");o.async=1,o.id=n,o.src="https://e.infogram.com/js/dist/embed-loader-min.js",d.parentNode.insertBefore(o,d)}}(document,0,"infogram-async"); Inflation Looms Consumers and small businesses will feel the pinch of lower supply and higher costs. Inflation, outside this event and on the rise, will remain above the Federal Reserve target of 2% through the end of 2022, even as the Fed raises rates and begins to reduce their balance sheet. The US supply chain will be in a slow recovery mode as infrastructure stimulus and global markets return to capacity. Small businesses are adjusting to a high demand low supply market through 2023. !function(e,i,n,s){var t="InfogramEmbeds",d=e.getElementsByTagName("script")[0];if(window[t]&&window[t].initialized)window[t].process&&window[t].process();else if(!e.getElementById(n)){var o=e.createElement("script");o.async=1,o.id=n,o.src="https://e.infogram.com/js/dist/embed-loader-min.js",d.parentNode.insertBefore(o,d)}}(document,0,"infogram-async"); Download Spring Beyond The Trends Report

Experian Business Information Services has just released the Q4 2021 Main Street Report. In addition to the Omicron surge, which significantly impacted labor and consumer engagement, an inflationary surge, the most significant increase since 1982, coupled with supply-and-demand imbalances, weighed heavily on US small businesses, making a notable impact on consumer sentiment. While workers were getting raises in a tight job market, rapid price increases eroded consumers’ earning power. Average wage earnings went up by 4.0% in Q4 ’21 vs. the previous year, yet a 7.5% increase in inflation results in a net decline in real earnings. Workers’ money is not going as far as it used to. Download the latest report to get the full detail on Q4 2021 small business credit performance. Download Q4 2021 Report Join us for the Q4 Quarterly Business Credit Review We will be going in-depth on the Q4 business credit trends in our upcoming Quarterly Business Credit Review. We look forward to sharing the latest small business trends with you. Register for Webinar

This perception of the marketplace has been a concern of consumers and small business owners, in the US, as they manage through the pandemic hampered marketplace. Small businesses are adjusting to a high demand/ low supply market that is expected to continue through 2022. The ability to move raw materials to manufacturers, products across borders, find space in warehouses, and put products on the shelf has become challenging as pandemic variants add pressure to a slowly recovering supply infrastructure. Large market participants will find disproportionate advantage, over small business competitors, widens as distributors focus on their largest clients and small clients feel cost and availability squeeze. Consumers store front engagement will increase, with a tangible delivery advantage, as distrust grows in a digital only storefronts ability to deliver on time. Here's my quick take on what's in our latest Beyond The Trends Report The Experian Winter 2021 Beyond the Trend report looks at consumer willingness and ability to spend behavior tied to the bets commercial supply chain industry participants are making, to ensure demand is met, emerging from the heart of the pandemic: Originations for new businesses, with less than a year in business and already participating in the commercial credit market, are up 157% from pre-pandemic levels. 36% of active U.S. businesses have been operating less than 1 year, as the spike in new business applications continue to be elevated. Commercial lending up 95% from same time last year to supply chain participants (Manufacturing, wholesale, retail, transportation, and warehouse) Although delinquency rates are historically low rates for wholesalers (Up 600%) and retailers (Up 101%) have been on the rise a components and inventories are slow to arrive. To operate at full capacity, small businesses will need consumers willing to spend. The fed will begin to taper and raise rates much earlier than expected, March 2022, to add downward pressure to inflation. Small businesses are betting on growth as investors view variants as a bump in the road vs a blocker. New business applications continued to roll at ~400k a month in 2021. This untapped market expansion will drive traditional lenders to reassess the risk of engaging emerging businesses in their first year of operation with limited historical commercial performance. !function(e,i,n,s){var t="InfogramEmbeds",d=e.getElementsByTagName("script")[0];if(window[t]&&window[t].initialized)window[t].process&&window[t].process();else if(!e.getElementById(n)){var o=e.createElement("script");o.async=1,o.id=n,o.src="https://e.infogram.com/js/dist/embed-loader-min.js",d.parentNode.insertBefore(o,d)}}(document,0,"infogram-async"); Supply chain bottlenecks will slowly dissipate. We expect to see variability in product availability as goods are delivered which will create scenarios of over-supply of some products while others remain tied up in transit. Lenders and creditors should monitor commercial health of businesses they interact with directly and indirectly to ensure portfolio stability and accurate risk based pricing. 2022 will be a recovery year for the US market. Consumers keep shopping! Small businesses keep fighting! The shelves will be full soon.     Download Winter 21/22 Report

Images of giant container ships clogging up ports have become the public face of global supply chains' disruptions. With widespread factory and shipping operations interruptions, supplier delivery times increased dramatically. According to U.S. Census, 38.8 percent of small businesses experienced domestic supplier delays during the pandemic. Some even predict that global supply chain disruptions could continue into next year. While some aspects of the supply chain—such as increased consumer demand and labor shortages—are out of your hands, there are risks within your supply chain that you can manage and build resiliency and agility. Running a tight supplier network gives you a competitive advantage during periods of crisis when others are struggling to keep up. What is Supplier Risk Management? Supplier risk management is the process of evaluating your suppliers to understand better where the vulnerabilities lie and then taking proactive steps to mitigate the risks you've identified. In the past, many client companies overlooked their suppliers' health and operational resiliency. If one supplier faltered, another supplier could be counted on to step in and take their place. But it's not always simple. As the global pandemic has revealed, there can be challenges to finding alternative suppliers if demand soars. Whether it's geopolitical risks, natural disasters or labor unrest, many risks can impact the operational health of the entire supply chain. One supplier slip-up can throw off the whole chain and put a business in jeopardy. Client companies need to know how stable their suppliers are—not just today, but in the foreseeable future too. Companies need to manage their supplier networks proactively. Common Supplier Risks Assessing the health of the entire supply chain is more critical than ever. Put these common supplier risks on your radar. Social, Ethical or Environmental Risks Increasingly, businesses are screening their suppliers for how well they perform on environmental, social or governance (ESG) factors. Businesses want to ensure that they are working with vendors with a solid track record on sustainability, employee relationships and transparency. For example, working with suppliers that flout emissions standards or engage in bribery can pose liability risks for you. The negative reputations of these types of suppliers can carry over to their clients. Moreover, doing business with suppliers that are on government sanctions or non-compliance lists can result in penalties for you and potentially even legal liability. Even companies that profess a commitment to ESG principles must demonstrate adherence to certain standards within their supply chain. It's what consumers increasingly demand and some governments are legislating. But how can you screen suppliers to ensure compliance with ESG principles? Technology can help: Experian's partner Global Risk Management Solutions (GRMS) allows companies to keep track of all their suppliers and verifies compliance within the required Environmental, Social and Governance (ESG) parameters. How to Create a World-Class Supplier Risk Assessment Program To learn more about Global Risk Management Solutions watch our interview where we discuss the main points of setting up a world-class program. Financial Risks Many businesses monitor their suppliers for financial risks, which is the likelihood that a supplier will run into financial difficulty, and therefore, renege on their obligations. Working with a supplier on shaky financing footing can undermine the operational health of your organization. For example, suppliers in financial distress can suffer service interruptions, poor quality and safety problems – all of which can spill over to clients, especially if it's a main supplier. If one of your suppliers suddenly closes its doors or goes bankrupt, it may be difficult to find a replacement supplier on short notice. Screening for financial risks has become more straightforward, thanks to technological advancements. Tools like Experian's  Small Business Financial Exchange and Supplier Check Reports provide information on small business credit performance to help you assess financial risks more efficiently. Operational Risks Any risk that results from flawed internal processes or management, rather than external events, is known as operational risk. This can include labor unrest, factory closures and equipment failures, which can ultimately prevent a supplier from meeting their deliverables. Understanding the potential and actual operational challenges faced by your suppliers can help you assess whether to work with them. Continuity Risks As the pandemic has shown, it's impossible to predict when a crisis might hit your supply chain. That's why businesses need to develop a continuity plan for how they'll handle unexpected crises and the steps they'll take for recovery. That's true of your suppliers too. Suppliers that lack continuity plans can easily get kicked off the line without a plan for a rebound. That can cause major disruptions to their clients. But how do you know what your suppliers' business continuity plans are? Strategic Risks Internal or external events that make it difficult or impossible for a company to achieve its business goals are strategic risks and you need to monitor your supply chain against them. For example, a supplier that may not have the resources to hire enough workers poses a strategic risk for its clients and can undermine its market position and reputation. Until recently, companies hadn't considered their supply chain as a strategic decision because of the siloed decision-making process. Bringing together supply chain functions with risk management and corporate strategy places supply chain management at the center of strategic planning and can build resiliency. Expanding the role of procurement within your organization can help management better assess the weak links, anticipate unexpected events and adapt to changing conditions. Insights drive awareness Managing your supply chain risk is only possible when you have insight and clarity into the financial health of your suppliers. Experian's powerful technology solutions allow you to do this in several ways: Finding alternative lookalike suppliers Your existing performing suppliers can be valuable in identifying other possible alternative or contingent suppliers. By leveraging tools like Experian's Business TargetIQ (BTIQ), you can effortlessly profile your ideal supplier with premier firmographic, geographic, risk and credit attributes. Once you have determined your ideal supplier profile, use the "find similar" feature to swiftly and easily identify other companies that meet your criteria and have similar profiles. Further expand your segment and qualify by adjusting the platform's robust built-in filters. In addition, third-party and other data can easily be uploaded to get a comprehensive 360-view of the suppliers. Why start from scratch when you can easily leverage existing relationships that are performing? Develop an Integrated Supplier Database Your ability to make informed decisions hinges on access to quality data about your suppliers. But getting reliable, real-time data on your own may be difficult. You may need to work with a third-party vendor that gathers and validates this information. But vast amounts of data can quickly overwhelm an organization, especially if it's siloed. For data to be useful, it must integrate with existing customer relationship management and enterprise resource planning software that your workforce uses each day. Integrating these databases offers a 360-degree view of your entire supply chain, which makes it easier to isolate risks. Look for vendors that can work with your legacy systems. Segment Suppliers into Risk Categories Segmenting suppliers by different attributes can provide valuable insights into how vital each supplier is to your operations. While there are several ways to segment suppliers – such as the amount of spend, product, service or volume – consider segmenting suppliers based on their risk profiles. This approach can uncover the level of risk exposure for each supplier, no matter how small. A risk event, even with a smaller supplier, can cause downstream disruptions. Translate Risk Data into Predictive Intelligence With vast amounts of data on suppliers, it's possible to create forecasting models to play out "what if" scenarios based on both historical information as well as real-time events. However, even the most powerful artificial intelligence programs are only as good as the quality of the data input. Quality data increases the probability of an accurate forecast and makes it meaningful. To tackle this, GRMS monitors suppliers in real-time and sends clients push notifications alerting them to any status changes. That way, they can act on potential problems before they hit their supply chain. Keep Supplier Assessments Up to Date While some companies may perform supplier assessments internally, it can be hard to continuously monitor them. For example, knowing when a supplier's insurance policy has lapsed or if regulatory actions have been taken against a supplier is crucial to building their risk profile. Companies without in-house expertise on supply chain risk factors should seek out third-party vendors that can gather, assess and monitor supplier data. Why is Supplier Risk Management Important? During difficult market conditions, a well-managed supplier network means having a leg up in the industry. Businesses that manage actual or potential risks may continue to operate without disruption, as well as gain important insights that can help turn risks into opportunities. They can also improve their competitive position and lower supplier costs. Information is power. On the flip side, companies that fail to adequately assess the supply chain risks can get blindsided. Here are a few reasons why supplier risk management is critical to business success. Greater Insights Help Create Strategies That Turn Risk into Competitive Advantages A supply chain is more than the building block of your business. It's what makes your business possible and is a revenue driver and a differentiator. A powerful, reliable supply chain enables you to get products and services to market faster and with lower costs than competitors. Case in point: according to Deloitte, 79 percent of organizations identified as "supply chain leaders" achieve revenue growth that is "significantly above-average." Disruptions anywhere along the supply chain can undermine those goals. According to that same report, only 8 percent of the organizations with "lower-performing supply chains" were able to achieve "above-average" revenue growth. The bottom line: with greater technology-enabled insights into your supplier network, you can turn risk into competitive advantages. For example, data insights can alert you if a major supplier faces financial difficulties, which gives you time to find a new, better-positioned alternative. Your competitors may not have access to such a resource, putting them at a disadvantage. An Improved Competitive Position in Your Market With shipping delays and poor customer service befalling businesses of all types in recent months, a well-managed supply chain can help you deliver greater value to customers compared to your competitors. According to a recent Oracle survey, 76 percent of people would trust and be more willing to buy from (78 percent) a company if they knew it used advanced technologies like artificial intelligence to manage its supply chain. By emphasizing supply chain risk management within your organization and creating processes to assess the risks, you can gain a competitive advantage in the industry. Lower Supplier Costs The cost of supply chain disruption is higher than you may think. Downtime, sourcing a new supplier and missed deliverables on your end can add up to astronomical amounts: on average, global supply chain disruptions cost $184 million per year in lost revenue for each large organization, according to Interos Annual Global Supply Chain Report. There are also long-term costs, such as reputational damage and customer perceptions, which are difficult to measure. In that same Interos report, 83 percent of responding organizations reported suffering "at least a little reputational damage" due to supply chain problems. Ultimately, a supply chain that delivers and allows you to keep your brand promises is worth its weight in gold. Reliable suppliers allow you to keep your overall costs in check. Proactive risk management of your supply chain is an essential cost containment best practice. Looking Ahead to the Future of Supply Chain Risk Management Some supply chain disruptions are out of your hands. But there are ways to intelligently and efficiently manage risks and bring stability to your company. Until now, it's been difficult for companies to assess and monitor the financial and operational health of their suppliers, either due to a lack of internal capacity or the necessary transparency. But that's changed: by utilizing robust technology solutions, organizations can minimize supply chain disruptions and optimize their strategic value.

By all indications, the supply chain challenge of this year will stretch well into 2022. Risk managers and finance departments are working in real-time to pivot, and keep customers satisfied, and while there’s currently no silver bullet to port delays, the lack of truck drivers or warehouse space, there are new strategies to consider. Join us for a very special supplier management webinar.   Will your current suppliers be capable of delivering or do you need to pivot? In our upcoming webinar our panel of experts will talk about simplifying supplier discovery and diversification. In this talk you will learn: How to conduct a world-class supplier risk assessment program How to identify look-a-like suppliers in specific industries How to filter on multiple risk factors and more We will also be taking your questions, it promises to be an illuminating discussion, we hope you can join us. Register for Webinar