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When John Theler stepped into the CFO office at SaaS developer Avetta last summer, among his list of priorities was the daunting task of better articulating supply chain hazards to management teams and industry at large.
Nine months later, Theler has no doubt added a number of items to his list of finance leader priorities, but his articulation task has become far less daunting. Not surprisingly, it seems that his thoughtful comments on the perils of poorly managed supply chains have paled in comparison to the high-wattage exposure that COVID-19 has suddenly brought to supply chains—an illuminating spotlight that Avetta and other suppliers of supply chain risk management services are now eager to put to work.
“There clearly are some supply chain challenges and weaknesses that have already been uncovered through this crisis that we’re in right now, and one of the long-term effects of this is going to be a higher scrutiny of supply chains going forward,” explains Theler, who says that while many company boards have made supply chain risk management a bona fide component of their environmental sustainability and governance (ESG) efforts, COVID-19 is suddenly causing some firms to take a closer look at what’s under the ESG hood.
“Our biggest competitors, frankly, are supply chains belonging to firms that just want to do it in their homegrown solution,” says Theler, who quickly mentions the advantages of using Avetta’s technology to address supply chain risk versus relying on typical in-house supply chain risk solutions.
There’s little doubt that COVID-19 and its impact on industry at large will play a defining role in the careers of many finance leaders. For Theler and other CFOs, the pandemic is a house filled with obstacles and innovation where for every door that closes there’s another that swings open. –Jack Sweeney
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Guest: John Theler
Company: Avetta
Contact: www.avetta.com
Headquarters: Orem, UT
CFOTL: What other metrics or approaches do you use to measure business performance and customer purchases?
Theler: We look at a number of additional metrics, and some of them are unique to Avetta’s situation. We are looking at connections for each of our clients and how many suppliers are they connected to. We consider the concept of nodal density, where some clients have a bunch of singular connections because those suppliers are unique only to that client. Other clients might be connected to a supplier, and that supplier might be connected to three or four other of our clients, and all of a sudden that supplier becomes a much more important supplier to us just because of the number of connections that they have. Again, we look at the number of connections between customers, clients, and suppliers, or their suppliers.
We look at the revenue per supplier. Going back to that concept of each supplier and their connections, and depending on how many are connected, we can assess our revenue as we get new insight into activations of new suppliers and clients and how many of those are activating. Because it’s one thing to sign up a client and have them say, “Hey, we want you to help us to manage our supply chain,” and it’s another thing to have their supply chain actively signed up into our network to do it. So, we’re looking at new activations.
Retention rates and renewal rates clearly are important metrics for us. As we watch our customer metrics, these are not always finance metrics, but other metrics that we need to be aware of because they have broad implications on the financials of the company. These can be customer support metrics, the number of help desk resolutions on the first call, abandonment rates—all of these things have cost implications, right? If you’re better at resolving problems early and you have fewer abandonment rates, you don’t need as much infrastructure for phone (help desk) and chat availability and different things to support your customers. These are just some examples of other metrics that we track. jb
