WELCOME!

Speaker:

Tua Forsell, Head of Continuous Improvement & Risk Management, Nokia

Hannele Palje-Rossi, Regional Manager Nordics, riskmethods

Moderator: Anna Bjärkerud, EBG | Network - Procurement & Finance Outlook

Supply Chain Risk Management Best Practices: NOKIA

risk happens & time matters

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Supply chain disruption is not an exception

▪ 56% of the surveyed enterprises had at least 1 disruption

▪ Almost 15% of enterprises had more than 6 disruptions

SOURCE: Business Continuity Institute & Zurich Insurance 2018

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Hundreds of disruptive events happen each and every day

Financial Stability

Innovation Potential

Operational

Pandemic Outbreaks

Disaster & Natural Hazards

Infrastructure

Political

Material availability

Disputes

WagesLabour, Health

& Safety

Environmental

Information Security

Regulatory & Legal

Quality

Performance

Viability Delivery MarketImage &

ComplianceQuality &

Performance

Currency Changes

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Revenue is lost Production Lines Stop Brands are Damaged

When risk becomes reality

Loss ofproductivity

Impaired serviceoutcomes

Customer complaints

Increased costof working

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The supply risk challenge

7Copyright riskmethods 2018

Reducing monitoring scope is not an option - the need to cover everything is obvious

8Copyright riskmethods 2018

The effort to find out the relevant piece of information is beyond human scale

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Awareness

Leaders digitise & leverage AI to achieve three key differentiating characteristics

Proactivity Faster Reacting

Mitigating Supply Chain Risks with transparency and visibility

Tua Forsell, Nokia Supply Chain and Procurement, Risk Management

February 19th , 2019

We create the technology to connect the world

Intelligent way to manage supply chain risksTua Forsell

12 © 2018 Nokia© 2018 Nokia

Content

Public

• Introductions

– Nokia

– Nokia supply chain

• Story of Supply Chain risk management at Nokia

• Supplier risk management – balance btw proactive and reactive

• Towards automation

• Future trends

13 © 2018 Nokia

Introduction

Public

Tua Forsell

Nokia Supply Chain and Procurement

Head of Continuous Improvement

and Risk Management

▪ Sept 2014 – Nokia

• Risk manager Global Procurement

• Risk manager Global Operations

• Head of CI and Risk mgmt

▪ 2006 – 2014 Pöyry Oyj

• Various project management positions

• Head of Corporate risk management

• Head of project procurement

▪ M.Sc. 2002, Aalto University, Helsinki

14 © 2018 Nokia

Disciplined execution for successful integration and transformation

2018201620142012

AcquiredMotorola Solutions wireless networks

CreatedNokia Technologies

Pulp, Paper, Rubber, Early Bell System products, Mobile phones

Launched Networkstransformation plan

SoldDevices & Services

AcquiredAlcatel-Lucent

SoldHERE

AcquiredGainspeed

AcquiredDeepfield

AcquiredComptel

CreatedNokia Shanghai Bell

Acquired Unium

AcquiredSpaceTime Insight

Public

Operational excellence and agility

15 © 2019 Nokia

Nokia GroupSummary of Q4 2018 numbers: improved profitability in both Networks and Nokia Technologies

Public

€6.9bn 3%

Non-IFRSnet sales

Change in net sales year-on-year(constant currency)

16.3%

Non-IFRS operating margin

© 2018 Nokia16 Public

EMS and Factories are producing thousands of products in a year

6,000

Purchasing volume to our suppliers

+14bn €

Receiving millions of Sales Orders from our customers in a year

~10,000/day

Managing a large supplier base of

+28,500

Shipping to every corner of the world

~120 countries

Moving thousands of tons of equipment in a year

566t & 3179 cbm/day

Managing factories (own and EMS) in 6 regions and 16 countries

24

Delivering through 8 hubs and hundreds of drop off points

220

A vital function for customer satisfactionSupply Chain and Procurement as the beating heart of Nokia

© 2018 Nokia17

Hubs

xDoc’s

Country warehouse

Global presence

with facilities in

(countries)

100

Nokia Global Distribution

Global Hubs

(distribution

centers)

9

Drop-off Points

(DOPs) in

countries

~200

Outbound cubic

meters shipped

2016

~700,000

Outbound TMS

usage coverage

2016

93%

Key global LSPs

15Balance between large Hubs to drive economies of scale and

xDocs/country warehouse to support staging for Project readiness

Complexity of the supply network

Public

© 2018 Nokia18

Current scope covered by Nokia Operations Risk Management

Sub

suppliers

Tier 1

Suppliers

Inbound

Hub

Manufacturing locations

(Nokia + EMS)

Outbound

Hub

Customers +

Project Sites

Inventory

Inventory

Inventory

Inventory

Inventory

Tier 1

Suppliers

Sub

suppliers

Supplier Risk

Mgmt

EMS Risk Mgmt

Factories + other

own site Risk

Mgmt

Business Continuity

Mgmt

19 © 2018 Nokia© 2018 Nokia

Content

Public

• Introductions

– Nokia

– Nokia supply chain

• Story of Supply Chain risk management at Nokia

• Supplier risk management – balance btw proactive and reactive

• Towards automation

• Future trends

© 2018 Nokia20

Supply chain risk mgmt. journey

2018Towards automated risk

management

• After challenging year 2014 with

component shortages, the formal

procurement risk mgmt. function

was created to turn the focus of

risk mgmt. from reactive to

proactive

• Supplier risk assessments for (500)

key suppliers in excel

• Started piloting Riskmethods

service

• From scattered risk

assessments in excel sheets,

created a Risk Assessment

Tool (RAT), and assessed over

800 key suppliers

• Kicked off project for mapping

tier 2:s of all suppliers for top

150 products

• Piloting of a new SAP based tool

for automated risk assessment

of standard suppliers

• Planning of further automation

of key supplier risk assessments

(less manual work for CMs)

• Started monitoring 1000 sub

tier locations in Riskmethods

• Implementation of corporate

wide Archer tool for BCP

• Automation of dataflow from

RAT tool to other databases

2017Strengthen visibility

of supplier tiers

2016Elevate risk management

function from procurement to

cover all operations

2015Start building systematic

supplier risk management

processes in procurement

2019 →

• Enabling journey towards automated and touchless supply chain risk management

© 2018 Nokia21 © 2018 Nokia

Content

Public

• Introductions

– Nokia

– Nokia supply chain

• Story of Supply Chain risk management at Nokia

• Supplier risk management – balance btw proactive and reactive

• Towards automation

• Future trends

22

Complexity of the Supply Chains – balancing proactive and reactive risk management

• Many products contain

components that can only be

manufactured by one supplier

• Complex supply chains with up to

4+ tiers

• Suppliers are located in high risk

areas

• Many suppliers use same sub

suppliers

• >15 000 first tier suppliers

Proactive risk management

✓ Regular risk assessments of key

suppliers (by supplier managers)

✓ Deep dives into the supply chain

tiers

Reactive risk management

✓ Online alerting system for

potential issues in supply chain

✓ Well defined and trained crisis

management procedures

Data analytics is an emerging trend for risk identification

23 © Nokia 2017

Mapping Supply Chains into a structured database• Started with most critical suppliers for top sales items

• Getting the information of manufacturing locations consumes lots of time

→ outsourced

• Once information is obtained, mapping in Riskmethods service is fast and

alerts are activated in days

2. Up-/Downstream-network of

one specific supplier

1. Value stream of one

component

Supply Chain Mapping and visualizing with riskmethods

24 Public

Risk areas monitored in RiskmethodsIn

dic

ato

rs

Financial Stability

Innovation Potential

Operational

capabilities

Pandemic Outbreaks

Disaster & Natural

Hazards

Infrastructure /

Mobility

Political

Material/Services

availability

Disputes

WagesLabor / Health

& Safety

Environmental /

Sustainability

Information / IP Security

Regulatory & Legal

Quality

Reliability / Performance

Ris

ksR

isk

Are

a

Viability Delivery MarketImage &

ComplianceQuality &

Performance

Currency Changes

25

Sources of Data for risk alerts

Public

Geo-Risks Country-Risks Company-RisksRisk Intelligence

(Geo-, Country- & Company

risks)

Quality check &

data enrichment

Alerts &

Scorecard update

AI masters

big data

search

Millions of

web pages

© 2018 Nokia26 © 2018 Nokia

Content

Public

• Introductions

– Nokia

– Nokia supply chain

• Story of Supply Chain risk management at Nokia

• Supplier risk management – balance btw proactive and reactive

• Towards automation

• Future trends

© 2018 Nokia27

Some examples running in Nokia factory networkAutomation solutions

Dream Cell Automated Flow FSM4 Assembly MAC line

Autonomous Intelligent Vehicle

RF Auto-tuning

IPOS (Intelligent PowerOff

System)

Multi-screwing

Plant Visualization System Automated Monthly

reporting

Public

28

• Defining and following meaningful KPIs e.g as lead times of components, escalations of shortages

etc.

• Analyzing

– changes in macroeconomics

– changes in the market, also from procurement point of view, e.g. other industries increasing demand of specific

materials

– relevant data that is available online

Using Data Analytics for transparency and risk mgmt

Example: KPI

analysis can

indicate risk

Public

29 © Nokia 2018

Data Analytics available to all by Power BI

Public

30 © Nokia 2016

Supplier Performance Prediction

Procurement Data Analytics

Confidential

Supplier Data

Supplier Data

Past

Performance

Expected

Performance

Vs

Predicted

Performance

Process KPIs / Input

Predicted

Performance

Process KPIs / Input

Learn

ing

Infe

rence

Prediction Model

Supervised Learning

© 2018 Nokia31 © 2018 Nokia

Content

Public

• Introductions

– Nokia

– Nokia supply chain

• Story of Supply Chain risk management at Nokia

• Supplier risk management – balance btw proactive and reactive

• Towards automation

• Future trends

© 2018 Nokia32

1. Data Harmonization

2. Ecosystem collaboration

3. Integrated Solutions

Future vision - Digital opportunity in Risk Management

Todays Risk Management is partly manual process which

may cause reactive risk mitigation and delays in mitigation

actions.

To keep our customer promises and avoid financial impacts

in crisis situation, fast recognition of risks fast and execution

of actions is required. Delays in recognizing risk and execute

mitigation action can lead to increasing costs and impact in

delivery performance to our customer. Augmented Supply

Chain Risk Management will support speed and good

decision making.

Increasing computing power and connectivity of world allow

us to automated and augmented process, with Leveraging

linked data concepts, deep machine analytics and

augmented governance process.

Why

Ho

w

Public

© 2018 Nokia33

Three steps to augmented Risk Management

1. Automated Risk

Reporting

Digital Impact reports, insight of

who is impacted, volume and

value…

2. Augmented Risk

Mitigation

Mitigation action proposals and

impact to performance and costs

3. Augmented Risk

Management

Automated mitigation actions

execution, e.g. automatic logistics

rerouting

Public

34 © Nokia 2017

Risk management trends in the next five years

Transparency Sensing and self-learning

supply chain

New ways to

mitigate risk

• Visualize & profile your supply

risk

• Identify relevant threats from an

ocean of data

• Understand interdependencies in

the supply chain

• Risks sensed and actions

prepared automatically

• High mandate for the one who is

responsible

• Ensure risk is embedded in

strategy & sourcing processes

• Shared risk with customers /suppliers

• Ensured network resiliency

Risk management trends in the next five years

COllaboration

SC TranspaRency

AutoMation

PrEdiction

your achievement is outstanding but not

yet complete (e. g. raw materials)

will be key!

We only start to recognize

patterns

… in Supply Chain mapping

… in monitoring risks

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Awareness

So in summary, Nokia are digitising in such a way as to continuously Up-Level

Proactivity Reaction speed

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Awareness: Digitise to enable seeing more & mapping critical connections

Throughout your organisation and beyond

Usability & Adoption

Strategic decision making across all processes

End-to-End Monitoring

Up and downstream monitoring across all supply

chain nodes

Accelerate user adoption to enable visibility and action

Embed Risk Everywhere

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Proactivity: Collaborate upfront to facilitate preventative scenario executionPrevent foreseeable threats

Insightful Analytics

Assess supplierbusiness impact

Risk Profiling

Understand latentrisk exposure

Gain actionable insight to critical areas and trends

Impact Profile

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Faster Reaction: Harness automated risk detection capabilities to enable faster reactionRisk Intelligence powered by AI

Relevant

Every second counts, monitor continuously

Reliable

Risk Intelligence offers trusted, reliable sources

Leverage machine-learning AI, to find the signals in the noise

Real-time

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Supply chain risk management is a differentiator

Cost reduction levers beyond procurement

Organizational efficiency

Supply chain innovation

Market monitoring & real time transparency

Integration of contract & risk management

Agile supply chain network development

Ethical sourcing as a differentiator

Enhanced audit approaches

Network collaboration

Supplier development in growing markets

Global supply chain network

Competitive Pressures Global Instability Era of Sustainability New World Order Digitalisation

End to end digital supply chain integration

Big data & analytics usage

Relevant and timely actionable intelligence

41Copyright riskmethods 2018

For more information about SCRM…

Check out our Resources LibraryThe basics, the need and the implementation of SCRM in webinars, papers, tools

https://www.riskmethods.net/resources/

Please register for our upcoming webinarProcurement’s Digital Journey: How to Become a Digital HeroFebruary 27, 9:00am EST / 3:00pm CEThttps://www.riskmethods.net/webinars/digital-hero/

Request your personal demoLearn why our customers trust riskmethods and see how riskmethods can fix the SCRM pain points specific to your company.https://www.riskmethods.net/request-demo/

42Copyright riskmethods 2018

Thank you

Tua Forsell

tua.forsell @nokia.com

Head of Continuous Improvement & Risk Management

Nokia

Hannele Palje-Rossi

hannele.palje-rossi@riskmethods.net

Regional Manager Nordics

riskmethods GmbH