The Panjiva early warning system and the power of directional intelligence

Posted on January 27, 2011

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I had the opportunity to spend about 30 minutes this morning with Josh Green who contacted me last week with an invitation to view Panjiva’s new platform.

Panjiva's Josh Green

For those unfamiliar with the service, Panjiva is an online resource for sourcing executives to gain knowledge about suppliers and manufacturers around the world.  Well that is the official description.

With supply chains becoming increasingly globalized, there are many factors that companies looking to expand their sourcing geography have to take into consideration.  These include risk allocation, relationship governance and transportation costs to name just a few.

There are of course as demonstrated by my interviews with Canada’s Trade Minister Stockwell Day regarding the Buy American policy, and with Jason Langrish, the Executive Director of the Canada Europe Roundtable for Business, political elements that also have to be incorporated into the equation.  In short, going global is more than just referencing a price index!

Therefore, the immediate questions that came to mind relative to Panjiva centered on both the type and depth of intelligence the service provides.

My questions when talking with Josh centered more on the technical intelligence aspect of the new platform or, as Josh called it, the whys in terms of the data Panjiva provides.  For example, Panjiva delivers to its users a high level view of purchasing /trade activity from a global perspective for specific products that can be acquired through its data base of 800,000 suppliers spanning 190 countries.

In the demo, Josh typed in toothbrushes which then produced a global map image that highlighted the countries through which the product was procured including their overall market percentage and related dollar amounts.  Trending data also illustrated as to whether said activity was on the rise or decline.  So referencing the toothbrush data, Germany had a 12% decline.

While this is useful information in that it serves as what I would call a high level early warning system re why the sudden decline in sourcing toothbrushes from Germany, Panjiva’s service at this point does not not drill down into the reasons for such a significant shift.  While this is an important intelligence gap, it should not detract from the value of the service in that at least you know that there is a potential problem.  Hence the early warning system moniker.

Once you have analyzed the business distribution and, have decided on a particular country from where to source the goods – let’s stay with toothbrushes referenced in the demo, you can then access the services database that lists the suppliers in that country.  China by the way, was the number one source for this product in the world.

Again, information of this nature is useful in that it directs you to possible sources for toothbrushes.  However, beyond the Panjiva rating, which is tied to transactional throughput for a particular supplier – the thinking here is that a good supplier will have a high activity level, the scorecard does not take into account specific weighted performance parameters or indicators such as quality, pricing, delivery etc.

This shortfall (and I am reluctant to use the word shortfall because the Panjiva service is very good in terms of what it does provide), means that the buyer will have to do their “on the ground” homework including as Jason suggested, placing a test order.

Based on my interview last week with senior energy executive and now author John D. Kuhns whose new book China Fortunes: A Tale of Business in the New World, doing one’s homework not surprisingly, is a mandatory step in the process anyway as is the establishment of a local presence.  In the book, John provides a fictional account of a protagonist whose experience with doing business in China offers a parallel look into John’s own experience when he entered the Middle Kingdom market in the early 1980s, and emphasizes the critical importance of having a trusted and reliable counterpart physically present in the foreign country where you plan to do business.

Suffice to say Panjiva’s true value is one that is centered on providing directional intelligence, in that it will point a buying organization (especially those that are new to the complex realms of world trade), in the right direction relative to potential source countries.  Now some might suggest that a high level view such as this would potentially expose companies that are new to the game to a lemming effect, in that a heightened activity level is not necessarily an indication of the true lay of the land so to speak.

This might be true but, given the amount of time that Panjiva has been in the game themselves means that they do possess an accumulated understanding of the world markets that at least increases the odds for a favorable outcome.  And it is from this standpoint that they are a useful service adjunct to an comprehensive global sourcing strategy.

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