DCAT Archives: Programs & Events




Supply Chain Reliability
Martin Widman, Head of the Global Business Unit Pharma Ingredients & Services,
BASF Corporation

Presented on Wednesday, November 4, 2009 at the Hyatt Regency Hotel,
New Brunswick, NJ.


BASF Global Procurement is considered an important business function that is key to the success of the business and an area that must deliver a competitive advantage

Widman shared how BASF mitigates risk in its supply chain with a globally standardized supplier evaluation system that provides a method to compare, trend and rank suppliers in areas such as social responsibility, environmental, health and safety and nonconformance.

He described how BASF developed and executed this system and the metrics used to continuously measure supplier performance. A key to BASF’s success, said Widman, is the global and regional alignment of procurement and business activities.

In the current environment of bankruptcies, shrinking markets and market capitalization issues, procurement activities are very important. The challenges in 2009 were managing risk, defining and prioritizing the right partners, cost reduction, and contributing to the reduction of working capital. “In times of crisis,” said Widman, “we need flexible and cooperative suppliers, which do not go overboard.”

Widman reviewed BASF’s risk categories, as well as risk management systems and tools.
He elaborated on the importance o aligning procurement, business and finance units and the use of internal round table meetings where these units agree on strategies to prioritize and mitigate risk.

As part of sustainability risk assessment, Widman described the process of creating a Supplier/Product Risk Matrix by plotting sustainability risk (product risk, SLS risk, EHS risk and REACH risk) versus business impact.

With recent sourcing issues in Asia, Widman said that some companies have unilaterally stopped sourcing from Asia. But he suggested that it’s a matter of balancing opportunities and risks. BASF’s perspective is that there is no general rule. “There is no magic tool,” said Widman. “You have to look at each product and supplier individually.”

Performing a dependency analysis between BASF and its suppliers was found to be a useful exercise that led to internal awareness of risks and was the basis for discussion and action.

Monitoring high-risk suppliers involves looking at a number of different indicators, including credit rankings and reports, lead buyers community network, news, and on-site audits. Widman emphasized that human interaction is critical. “You want people to know and trust each other and that can act together quickly.”

Strategic Supplier Management objectives include transparency along value chains and products for key suppliers, management of BASF dependencies and risks, and value driven business relations with key suppliers.

The major challenges companies face when implementing a risk management system, said Widman, include managing a global roll-out and the lack of immediate tangible benefits.

In summary, he advised attendees to avoid letting analysis become paralysis. Companies should focus on global communication, balancing workload through pragmatic and efficient approaches, understanding long-term benefits and the immediate and real-time management of risks, and the creation of measures.