Earlier today, Panjiva announced an exclusive relationship with Sinosure, the leading provider of information on the financial health of Chinese companies. Now we’re moving quickly to provide you with the tools necessary to assess the health of your Chinese supply chain.
Specifically, I’m excited to tell you about Panjiva SinoScreen — a diagnostic tool that will help you quickly and inexpensively assess the health of your Chinese supply chain. The Panjiva SinoScreen report will provide you with an assessment of 20 Chinese suppliers, based on Panjiva‘s analysis of import data and Sinosure‘s analysis of credit data. Why two data sets? No one data set is perfect, so triangulation using multiple data sources increases the likelihood that you’ll reach an accurate conclusion about which of your suppliers stand the best chance of surviving the downturn.
Between now and May 31st, Panjiva SinoScreen is available for a one-time fee of $5,000. Check out a sample of Panjiva SinoScreen.
To order your customized Panjiva SinoScreen report, contact us at +1 212 763 2125, or fill out this short form.
Over the last few years, I’ve heard many complaints about the lack of reliable information on companies around the world. However, I’ve heard one complaint more than any other: “There just isn’t good information on the financial health of Chinese companies.”
Today, I’m pleased to announce that Panjiva is tackling this problem head on, by providing access to information on the financial health of 8 million Chinese companies.
How are we doing this? Via an exclusive deal with Sinosure. Let me explain…
For the last few years, we’ve been looking for credible information on the financial health of Chinese companies. To be sure, there are lots of organizations offering information on Chinese companies — but credible information on financial health? Tough to find.
About a year ago, we met Sinosure. Sinosure is the organization that was originally set up by the Chinese government to provide export insurance to Chinese companies. In order to correctly price this insurance, Sinosure had to develop an approach to assessing the financial health of exporters — and get access to the information needed to fuel these assessments. Which brings me to why we concluded that Sinosure can provide the best possible perspective on the financial health of Chinese exporters:
- Access to the most information — By virtue of their government ties, Sinosure has access to an unbelievable array of data sources, providing Sinosure with a variety of data points on any individual company.
- Reliance on their analysis for decision-making — At Panjiva, we’re by nature skeptical of data sources — because every data source has a bias. Interestingly, that’s what makes Sinosure so compelling. Their bias is to get the analysis right. After all, if they get the analysis wrong, they’re going to price insurance incorrectly and lose money. At which point, the Chinese government loses money.
Is Sinosure data perfect? Of course not. No data set is. That’s why we advocate looking at multiple data sets anytime you’ve got an important decision to make. My next post will walk you through how Panjiva‘s making this kind of triangulation as easy as possible.
In the meantime, I want to welcome Sinosure to Panjiva‘s extended family. In the months ahead, our U.S. customers will be able to get access to Sinosure reports on any Chinese manufacturer — only through Panjiva.
Yes, I’m finally twittering: http://twitter.com/panjiva
And, as a consequence, I’ve become more concise. So, in response to Jason Busch’s SpendMatters post on Alibaba’s shortcomings and what the future holds for buyer-supplier marketplaces, I’ll simply say, “Amen.”
Check it out: http://www.spendmatters.com/index.cfm/2009/4/22/Alibaba–Is-China-Really-Still-the-Top-Supplier-to-Global-Buyers
Thanks to Cody for flagging this item from Supply Chain Digest. IBM has released a report on the issues that supply chain executives are most worried about. At the top of the list: supply chain visibility. Second on the list: supply chain risk.
Apparently, this is consistent with what the team at Supply Chain Digest has been hearing. And it’s totally consistent with what we’ve been hearing from our customers.
For more from IBM, consider taking a trip to Brussels.
These days, we’re receiving lots of questions about risk, how to identify it, and how to manage it.
Over at Supply Chain Management Review, you’ll find some initial thoughts on how to use data to identify and manage risk. Specifically, I explore the strengths and weaknesses of financial data, operational data, and on-the-ground intelligence. Not surprisingly, the most innovative companies are finding creative ways to leverage each of these classes of data as they seek to manage risk. Read more.
Definitely worth checking out “A Look Ahead” by Sean Murphy, at Supply Chain Management Review. Sean spoke with supply chain thought leaders and identified a handful of things to look for in 2009.
It’s particularly interesting to read the bit about how CIO’s are getting more involved in supply chain management decisions, at least when it comes to choosing technologies and systems. It raises the question, though… If Chief Information Officers are getting more involved in supply chain management, does this mean that supply chain managers are getting access to more and better information? So far, I’m not convinced.
To get a sense of the impact of the economic downturn on global suppliers, the Panjiva research team took a look at the shipment data that we track, clean, and analyze on a continual basis using our proprietary algorithms. The data suggest that the economic downturn is decimating suppliers. Consider what we found in the apparel industry, a bellwether of global trade:
- In October 2007, there were 43,653 companies that were actively serving the U.S. market. (For these purposes, we consider a company “active” if it has shipped to a U.S. customer in the preceding three months.)
- By July 2008, the number of active suppliers had dropped to 22,099.
- By October 2008, the number of active suppliers had dropped to 6,262 — a 70% drop in just three months.
- Of the 6,262 suppliers that were active as of the end of October, 40% suffered a year-over-year drop of 75% or more in volume shipped to their American customers.
To help companies spot suppliers that are at risk of failing, we are establishing the Panjiva Watch List. This list includes each supplier that has suffered a year-over-year drop of 75% or more in volume shipped to their American customers.
Also, we will continue to track the industry-wide stats. So that we can quickly communicate whether things are getting better or worse, we are introducing the Panjiva Pain Index – a number that gets higher as things get worse. The Panjiva Pain Index is calculated by averaging two numbers: the percentage of suppliers previously considered “active” that became “inactive” in the last month, and the percentage of “active” suppliers that are on the Panjiva Watch List.
In August, the Panjiva Pain Index stood at 24. The percentage of companies that went inactive was 23, and the percentage of companies on the Watch List was 24.
In September, the Panjiva Pain Index stood at 37. The percentage of companies that went inactive was 32, and the percentage of companies on the Watch List was 41.
In October, the Panjiva Pain Index stood at 43. The percentage of companies that went inactive was 46, and the percentage of companies on the Watch List was 40.
Questions? Comments? Let us know.
Another article in the New York Times about factory closures in China. According to government statistics, 67,000 Chinese factories closed in the first half of the year. 11,000 per month. And that was BEFORE the global economic meltdown.
It’s scary enough that all of these factories are closing. It’s even scarier that these closures are happening without any warning.
See a previous post about how you can spot risk in time to do something about it.
As David Barboza reported over the weekend in The New York Times, Chinese authorities are expanding their melamine investigation. Melamine is the toxic chemical that should not be making its way into the food supply chain — but that nevertheless has been. By now, some may be tuning out news about food (and product) safety scandals. Not sourcing executives… Managing risk — particularly food and product safety risk — has risen to the top of the agenda of most sourcing executives. The same is true for government regulators, both here in the U.S. and abroad.
What is perhaps most interesting, though, is that there really aren’t a lot of good ideas on how to effectively manage this category of risk. I was struck by this comment from a professor at NYU, who was quoted in Barboza’s article:
“’A year ago, everybody should have been in a complete panic about it and done something then,’ said Marion Nestle, a professor of food studies and public health at New York University and the author of ‘Pet Food Politics: The Chihuahua in the Coal Mine.’ ‘Someone should have required that melamine not be in any food product.’”
Professor Nestle seems to be assuming that simply requiring that melamine be excluded from the supply chain would have solved the problem. Not so — and particularly not so in China. The number of participants in the food supply chain — just in China — is huge. How would you communicate new requirements to all these participants, let alone enforce these requirements?
Putting the right regulations on the books is perhaps a necessary step, but a much more comprehensive approach to solving the problem is required. As noted above, regulation must be coupled with communication and enforcement. In addition, key players (government regulators, inspection agencies, private sector leaders) must agree on standards and provide for transparency about who is abiding by these standards. This last piece creates positive incentives for good behavior — an important complement to punishments for bad behavior.
I’m hearing a lot of anxiety from our customers about the possibility that their factories might fold. This anxiety is justified. The economic slowdown is causing lots of buyers to reduce and delay orders. For suppliers with high fixed costs, this behavior could prove fatal. How do you find out if your supplier falls into this category — before the supplier goes under and leaves you hanging? Some ideas:
1) Buy a credit report on your supplier
Credit reports will tell you if your supplier is paying *its* suppliers on time. If it’s not, chances are good that your supplier is in trouble. D&B is a good place to start for this kind of information.
2) Look at your supplier’s export activity
Is your supplier’s export activity dropping precipitously? Definitely a sign that you should be preparing a back-up plan. (Full disclosure — Panjiva sells this kind of data, so obviously I think this is a particularly effective approach.)
3) Ask your supplier contact
Simple enough, but most people overlook this approach. Ask your supplier contact if he or she is worried. Chances are good that your contact will put a positive spin on trouble at the supplier — but you never know what you might learn until you ask.
Figuring out if your suppliers are about to fold is really important… Gives you a bit of time to come up with a back-up plan, and minimize the disruption to your business. Have other ideas on how to figure out if your suppliers are about to fold? I’d love to read about your ideas here — and of course via email (email@example.com).