Ariba Offers Tips for Managing Supply Risk Post Recession

As the global economy slowly begins to recover, a new business climate is taking shape that will permanently change the way organizations think about and manage supply risk. To help companies understand and manage the heightened risks created by the downturn, Ariba, Inc. (Nasdaq:ARBA), the leading spend management solutions provider, released a new whitepaper, "Lessons Learned from the Recession: Supply Risk," which outlines tips for dealing with the supply volatility, capacity constraints, and global uncertainty that have become the norm in today's business world.

"The global financial crisis has taken supply risk to a new level. More than 75,000 businesses in the US have filed for bankruptcy since the beginning of 2008 and the number is expected to rise again this year. Credit remains extremely tight. And inventory and capacity reductions, layoffs and hiring freezes have reduced suppliers' abilities to respond to fluctuations in demand," said Kris Colby, Solutions Marketing, Ariba. "Companies that take these issues head on and attack risk now will gain not only a valuable insurance policy against disruptions to their business, but also competitive advantage and substantial bottom-line savings. But doing so requires a new approach."

How can companies effectively minimize their risk under current conditions? Based on lessons learned throughout the recession, Ariba offers the following tips: Don't be fooled. Supply risk is not going away just because the economy is improving. No one can be sure when the recession will end. But one thing is clear: companies will face more supply risks and challenges than ever before. Make sure your organization has the right tools and processes in place to effectively manage and overcome them. Include risk management in your sourcing strategy. Audit the financial, operational, and balance of trade exposure of your most strategic and mission-critical suppliers. Look for early warning signs such as drops in quality or shipment delays. Increase the frequency of supplier performance reviews. And automate your supplier management process. Learn to operate in the "New Normal." The manual, spreadsheet-driven approach traditionally used to manage supply risk will no longer cut it. Organizations need to leverage flexible, technology-based solutions and processes that allow them to respond quickly to changes in market conditions and business needs as they arise rather than just relying on historical financial metrics and calculations. Understand that all risk is not the same. Supply risk is often spoken of as a single entity. In reality, there are different risks in your supply chain, each with a different set of challenges, impacts and mitigation techniques. Understanding and mapping these risks is the first step to controlling them. Engage multiple stakeholders. Make sure any supply risk initiative is driven by a cross-functional team. This will help secure C-level support and resources and provide access to specialized skills needed to effectively assess risk and deliver results. Commit for the long haul. Companies will never be able to completely eliminate risk from their supply chains. However, by taking a sustained approach to managing it and mapping efforts and resources to their priorities, they can mitigate its negative effects.

"The threat of supply risk is greater and more real than ever," Colby said. "Companies that start a comprehensive risk management initiative today will be prepared to deal with this threat and position their organizations to compete more strongly when economic conditions improve."

Ariba offers a comprehensive range of solutions that combine best-in-class software, global supplier and supply market expertise and risk mitigation services to help companies efficiently and effectively manage their supply risk. The company also hosts an online resource center filled with strategies for controlling costs, reducing risk and maximizing performance as well industry reports, whitepapers, podcasts and other tools companies can leverage to design and execute effective risk management programs.

To learn more about Ariba's Supply Risk solutions and the value they can deliver, or to access the Supply Risk Center, visit ariba.com/programs/supplyrisk.cfm About Ariba, Inc. Ariba, Inc. is the leading provider of on-demand spend management solutions. Our mission is to transform the way companies of all sizes, across all industries, and geographies operate by delivering technology, service, and network solutions that enable them to holistically source, contract, procure, pay, manage, and analyze their spend and supplier relationships. Delivered on demand, our enterprise-class offerings empower companies to achieve greater control of their spend and drive continuous improvements in financial and supply chain performance. More than 1,000 companies, including more than half of the companies on the Fortune 100, use Ariba solutions to manage their spend from sourcing and orders through invoicing and payment. For more information, visit www.ariba.com.

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