Q1- What is the problem mentioned in this case study

This case study identified the supply chain risk is front of mind for nearly all Global 2000 firms like never
before, especially after various natural disasters in Iceland, Thailand and Japan - not to mention
numerous media fires that stem from unsavory upstream business practices and related regulatory
penalties. Andthere’s more: strikes, compliance, political risk – the risk list goes on.

Q2- Discuss some of the drivers that make SCRM solutions attractive

Some of the drivers that make SCRM solutions particularly attractive include:

• The move from a slow internal and compliance driven model to one that looks to external and

dynamic content

• Low solution price points – nearly out of box availability and SaaS delivery have combined to make the
tools accessible to even small or mid-size businesses

• Big data – with tens of thousands of data sources incorporated, the underlying content has grown
beyond what any individual could manage and analyze

• Functionality – ease of use has significantly improved, putting visibility and analytics in the hands

of decision makers at all levels in organizations

Q3- Shortly discuss the Real-life SCRM example in your own words

AGCO is a Duluth, Georgia-based multi-business unit, global manufacturer of agricultural machinery.

The company traces its roots back 100 years but was formed 25 years ago and has operations in

primarily North America, Brazil, Western Europe, China and India.

Key business objectives were identified:

1. Eliminate internal risks

2. Focus on top 250 suppliers

3. Consider supplier, location and country risks

4. Automate data capture to minimize manual efforts

Outcomes or business benefits were defined as:

• Better sourcing decisions through risk adjusted Total Cost of Ownership (TCO)

• Sub-tier supply chain risk identification through multi-tier supply chain visibility

• Alignment of category management strategy with supply chain risk exposure

The SCRM effort at AGCO was not a quick fix, or narrow point initiative but was rolled into a holistic

approach that combined:

• Internal organization change to a matrix structure with category owners that also have regional or
even cross-enterprise roles in addition to their responsibilities at the business unit level

• Implementing the position of a risk manager

• Supply base analysis with development of suitable risk mitigation strategies

• Supporting software tools to enable automated visibility and risk analysis Training was a key
component in all of the above to drive the transformational aspect of changing the way the company
engages with its risk exposure.

The New Approach

With the company prepared, the stage was set to engage with risk in a new way that managed to

span several areas - country, logistical, performance, supplier, supply and more.

AGCO's new approach, which integrates SCRM and Supply Risk Network into its daily operations, is

created by risk methods. It delivers:

• 100% automation - with early warning signals

• Multi-tier supply base visibility

• Full visibility of all types of risks: by supplier, category and location, including natural disasters,

legal and compliance, CSR, cost and quality

• Comprehensive approach: monitor the entire process from risk analysis and risk evaluation

through risk management right up to residual risk control

• Mobile technology and high user acceptance through ease of use

AGCO's goals for its investment are mainly focused on cost avoidance:

• Avoidance and reduction of crisis costs through reaction time advantage

• Prevention of price increases

• Prevention of revenue shortfall

• Prevention of loss of goodwill and shareholder value through reputational damage

• Identification of first and second tier supply chains, data updates, risk monitoring

• That said, the company has also achieved hard savings from:

• “Advanced Sourcing” savings through supply chain risk transparency

• Automation of manual risk data search, input and updating

• (Coming soon) Reduction of CBI insurance premium through supply chain transparency

Q4- elaborate the lessons learned shortly in your own words

• An SCRM program needs to create and drive risk awareness at all corporate levels

• Include internal stakeholders (engineering, finance, logistics, quality etc.) early to identify

functional risks and align them with responsibilities

• Make risk management part of organizational design, roles and processes before implementing

tools

• Spend time on master data management, cleanse supplier master data

• Understand supply base (locations, industries, competition, etc.) and select pilot group (AGCO:

top 250 suppliers comprise 90% of spend)

• Invest in training to create awareness and change mindsets (buyers can be overly focused on

PPR savings - consider PPR savings vs. risk reduction)

• Select one core SCRM content provider (AGCO chose risk methods) and enrich content &

monitoring capabilities using additional partners