Welcome to this episode of Art of Procurement's Provider of the Week series. I'm your host, Jothy Hartley. These conversations shine a light on the established technology providers who are shaping, scaling and continuously evolving the digital procurement ecosystem. In just 20 minutes, we explore each organisation's product strategy, market impact and the ways they help procurement teams solve real business challenges. Our Provider and Startup of the Week episodes are the only formats at Art of Procurement that focus specifically on a company's product. Today, we are featuring PreWave. Pre-Wave is at the forefront of a new era of supply chain transparency, resilience and sustainability. They combine customer and industry data with sources from news, social media and other databases to understand and report on supply chain risk, analysing sources in more than 50 languages across over 200 risk categories. To tell us more about PreWave, I'm delighted to welcome co-founder and CEO, Harald Nitschinger. Harald Nitschinger is an Austrian tech entrepreneur who co-founded the company with Lisa Smith, growing it from a university spinoff into a leading AI-enabled supply chain intelligence provider now serving enterprise customers worldwide. He has steered PreWave through rapid growth phases that include multiple venture funding rounds, including a €63 million Series B strategic international expansion and adoption by leading global brands. He is a frequent speaker and commentator on topics including AI in supply chains, supply chain resilience, sustainability and regulatory compliance, and is widely regarded as a leading voice in the future of risk-aware global trade. Thank you for joining me, Harold, as our Provider of the Week. Pleasure to be here today, Jyoti. So for anyone who may not be familiar, what does Pre-Wave do today? And how has your solution evolved over time? We really do everything supplier or supply chain risk management. We work with more than 250 global brands, many of them having tens of thousands of suppliers, and we help them understand what is happening at those suppliers in real time. But we also help them to understand the risk of those suppliers. So it's both the real-time visibility into what's happening. It's into the risk of the suppliers, ranging from disruption and operational risks, all the way to ESG and sustainability and compliance risks. And we have to understand them, the deeper supply chain behind their suppliers. And we put that into a holistic offering, we call it. yeah okay so what would you say are the are your strongest areas of differentiation in the current market then so really what one of the main things that sets us apart is this holistic offering that i just mentioned what i mean by holistic holistic means um over the last couple of years obviously esg and looking at the sustainability and human rights at the supply base has grown in importance that has translated into many regulations both in the us in uk but also in europe things like the supply chain laws and and and and forced labor laws and and the like but then there's also the resilience of the supply chain and understanding not whether a supplier is is sustainable or has a good profile from a human rights perspective but although whether it's a stable supplier where I have security of supply within my supply chain. And typically you have vendors on the market focusing either or. So either supporting strongly on the sustainability side or supporting strongly on the resilient side. We founded PreWave in 2017, as you mentioned, as a university spinoff, actually, that's actually almost 10 years ago now, with already this mission of, we want to make supply chains more resilient, sustainable and transparent. So sustainability and resilience was always part of the founding vision of PreWave and has stayed with us today. Today we have more than 60% of our customer base are using PreWave both for sustainability risks and ESG in their supply chain and for resilience and disruption risks in their supply chain. And that makes us quite unique on the market. Maybe a second point is that we offer a unique ability for our customers to understand their deeper supply chain, which is also a major challenge. Yes, I know my tier ones and in some cases I know what's the tier two supplier, but we can drive the visibility into the deeper supply chain. And I think these two things combined are what really differentiate us on the market. Yeah. And just picking up on the fact that things have changed, I mean, As you say, it's nearly 10 years. So how has customer demand changed in the last few years, maybe particularly in the last, say, three to five or six years? How has that influenced your roadmap and the direction that you're going in? Incredibly so. And I must say, when I reflect back on founding PreWave as a supply chain risk startup in 2017, I was not aware of how much supply chains are really tied to these waves of changing landscapes. And I've been now over the last nine years through many such waves, which have been really very significant for our customers. I mean, the first big one was COVID. Kind of like in a very short period of time many companies realizing they have to bring more visibility to their suppliers to the supply chain which suppliers are still operational which materials can they still source that evolved into many shortages and all of the upheavals we saw kind of in 2021, 2022, semiconductor crisis and the like. We've been really been in the midst of that. the next wave was then the the war in ukraine which particularly for european manufacturing companies was really a shock because quite a few supply chains were to a significant extent originating in ukraine in automotive we had some cases but also around raw materials And then kind of on top of that came this ESG wave, which started in 2022, gaining steam into maybe 23, 24. With the many of these regulations coming online, we had in Germany, the German supply chain act. This is now moved on the European Union level. At the same time in the US, we had the UFLPA as a bigger force labor protection act. Act and really almost a dozen more of these regulations which heavily hit and affected the procurement departments we were working with. And we also realized we also need to bring solutions here. And if I look back on the last year, it's now again shifted in terms of priority into the kind of volatility of global supply chains, driven more by these trade barriers, trade war situations, tariffs. It's really brought, let's say, the volatility around global supply chains to a whole new level, right? Where these trade barriers, tariffs, and then the responses from certain countries, maybe blockading certain materials from exporting happening in a matter of days, which really made it clear for companies how important this need for having the visibility into the deeper supply chain, having that at your fingertips. And we currently see, let's say, our customers who have been with us for quite some time and are at a high level of maturity, been using the system, having these processes in place are really thriving in this environment and getting to much faster insights and decision making. Whereas other companies that are maybe not yet using any such systems who are maybe still crunching various Excel spreadsheets in internally. And you really don't see the difference that takes. But yeah, in the last couple of years, it's been really that geopolitical volatility that we have also reacted to with functionality. For instance, we launched the scenario planning module last year, which is really about our customers modeling different scenarios that can happen in the world and how that affects them. Yeah. Okay. And that's a really, really that's very comprehensive in terms of the looking outward at the at the outside ecosystem if i could maybe um turn our attention to the internal ecosystem of of say the procurement tech landscape how does your where does your platform sit within that so somebody that's working in a procurement role or a supply chain role how do they interact with your platform on in their day-to-day yeah that's a great point so typically when we work with customers they have a core team oftentimes reporting directly to the CPO because the center of excellence or some similar names that are handling the core risk management strategy and processes in the organization and let's say that the core users on risk management deriving strategies at those core groups of of individuals that have central responsibility. But then you also have the broader purchasing organization, right? You have oftentimes dozens or hundreds of individual purchasers who are running the supplier lifecycle, who are potentially qualifying onboarding suppliers, managing their supply relationships. And both of these have to have risk at the fingertips, right? The central team, of course, works very strategically with the data, deriving strategies on maybe where to multisource, where to diversify, how to drive maybe certain compliance processes around ESG. The individual procurement manager is working in the procurement systems that they have at hand. These are the Coopers, the Aribas, the Cheggers. And here we have an integration strategy. So to reach the broader procurement team, we integrate our risk data into these procurement systems to bring risk at the fingertips of the broader procurement managers and purchasing officers. They should not work in pre-wave. They work in the procurement systems. But risk should be and needs to be an important part of decision making when we decide for which supplier to award or which supplier potentially to improve during the lifecycle. They need to know the risk. They need to know when something's happening. But the core team, these are the power users and these are oftentimes than a handful of users that are sitting more centrally in the organization. And amongst those core users then, so what do they, in any feedback sessions that you have with them, what's the capability or feature that these customers and these longstanding users tell you that they rely on the most, even if it's not the most flashiest? So last year, again, the given, obviously, the changes based on the dynamics that are in the market. For instance, if I dial back the clock to 2022, 2023, a functionality we offered called commodity monitoring, understanding risk, not just from a supplier perspective, but from a material commodity perspective So where can I see shortages in certain materials That was a heavy heavily used functionality Last year it was the scenario planning which enables that core group of power users in the organization to understand the impacts of potential tariffs, potential trade barriers, potential conflicts. So in the scenario planning module, you can essentially model different worlds you think are likely by combining different risk factors. For instance, we model an increasing US-China conflict scenario, which then brings with it increased tariffs and then increased retaliation and maybe more likely conflict in Taiwan. And it's really a package of things that we can then expect. And they run that against their supply chain, understanding if that scenario materializes, which of their suppliers are most heavily affected by that and then they can drive response towards that scenario so that was just based on this kind of volatility we're seeing very heavily used functionality in the last couple of months so it sounds to me like from a customer use case point of view then would you say then that the the most consistent outcome that the customers have or they achieve are around the risk management, risk mitigation, compliance, governance, resilience, as opposed to, say, savings or efficiencies. What would you say are the most consistent outcomes? So there are various business outcomes that can be achieved, and they depend, again, on which type of use case you're following. For instance, if you're looking at a more ESG or compliance-driven use case, maybe I have to comply with a certain regulation. Here, a customer really wants efficiency, right? They want to obviously comply. They do want to do it as efficiently as possible. And that is where we employ AI, employ automation. we always follow an approach where we follow a strong risk-based approach, meaning we are not sending, if you're looking at 5,000 suppliers, 5,000 surveys. It's a very manual, very labor-intensive process. That's a burden for the supplier. It's a burden for the procurement organization. We actually want to highlight out of these 5,000, which are the 1, 2, 3, 4, 5% of suppliers that are really at risk or high risk. and those I drive more specific mitigation and maybe launch a survey for only 2% of my supply base and that in and of itself drives efficiency so we have case studies with customers who have unlocked 40x efficiency gains out of switching from a survey heavy model into a more AI automated scoring and risk-based approach that's the ESG and compliance side yeah that's an interesting metric. So just building on that then, Harold, how would your current customers track that ROI just as a result of using your solution then? It's purely a measure of to which extent can I leverage AI to reduce manual engagement into the process. So let's say without PreWave, I would be sending 5,000 surveys which I need to drive from my procurement organization. For that, I need to have, I don't know, three, four people that are driving that process. With pre-wave, I can make you with half a person driving a more targeted narrow approach. So that's, let's say here the ROI that can be gained. On the resilient side of things, of course, it becomes more interesting because there we are driving not just efficiency, but there we are driving actual opportunity and business outcome, right? So on the one hand, so resilience is this kind of ability to, on the one hand, react fast to mitigate and on the one hand actually to prevent in advance, right? How can I set myself up in a way that if something happens, my supply chain still doesn't break. And on the reactive side, It's about driving into a mitigation from a supplier incident could be an insolvency, could be a factory fire driving into a mitigation that happens in a matter of hours that I'm already in a matter of hours. I know it's happened. I'm in touch with the supplier. I place my mitigation strategy would could be I place another order than an alternative supplier. That obviously drives real monetary gains because then I'm actually avoiding more expensive measures because the longer I wait, the more expensive it is to then start air freighting, finding more alternative and costly other options. Just on that then, have there been any new or unexpected use cases that you have seen or that you are seeing from leading procurement teams? Unexpected is always when they start using the tool in a way that it wasn't really set up to be used, but they're kind of, let's say, finding a new path. One of these paths is always when they, for instance, start applying Pre-Wave to not just monitor suppliers, but try to monitor their competitors and try to gain insight into, know what is my competitor doing on the sourcing side because we can give this visibility into the deeper supply chain you can get some visibility into where is my competitor actually sourcing certain materials from so you can kind of benchmark yourself to some extent whether your sourcing is set up in a maybe more i don't know china heavy way than that of my competitor yeah so and these are the interesting insights they also want to derive from the system yeah that sounds like a Very interesting set of information there, men metrics. Just turning our attention for a minute then to how easy it is to integrate your solution and into existing teams, let's say platforms and systems. How does your solution fit Yes So here it as I mentioned internally and with with our customers we call this the seamlessly integrated scorecard approach And that means as pre-wave, we want to be the single source of truth for risk. So we are the source for incidents at suppliers. We are the source for high quality scores at suppliers. but that needs to feed into the procurement systems that are actually used by the broader purchasing team and I mentioned them before these are the procurement systems we all know and thereby we have then an integration we are for instance part of the Coupa marketplace we have integrations into Ariba we have ready-made integrations with Chega and Ivalua to make sure that our scores land at the right place at the right point within those systems for the purchasing officers to take a decision, not just based on price and performance, but also risk. And I think that's really what it should be. Take decision also based on risk within the supplier lifecycle. Okay. And so what advice would you give to organizations who are maybe about to go thinking about or going through a transformation or an implementation to any of the platforms that you've previously mentioned to expand into your platform so it it incorporates and includes all the features and benefits that your platform provides what advice would you give them so maybe two two points the first is on the operating model this is something that we regularly talk to customers and and and during the onboarding phase, implementation phase of the project. How do you set yourself up to operate risk management in your organization? And here it's important to have this this approach of having both a central team that is depending, of course, on the size of the organization, could be as small as one or two people driving risk management centrally. Thinking about what's the process, when do we take decisions, running maybe an annual or quarterly risk analysis for certain topics. And at the same time, bringing risk also into the broader procurement organization. But you need both. What we've seen not working is purely driving it into the broad procurement organization without central oversight. and putting too much of the process onto the individual purchases. Because as we know, the purchases are already overloaded with too many systems, too many processes, too many things to do. And yet another thing on top, which they are then responsible for, is not helpful. It needs to feed into the processes that already exist. And that's why for us it's so important to say the purchaser should not log into PreWave as another step in their workflow. Rather, the risk needs to be in the procurement system they are already using. And that's fully integrated. This key operating model that we are following. Yeah. Yeah. Sorry. It sounds like you're saying it's fully integrated. Absolutely. That's the point. Yeah. Amazing. Okay. Just as we are about to wrap up then. So what should customers expect next from pre-wave? I think what we have so far been known for and really built a brand for on the market is is having a strong foundation of AI based capabilities. So this is the alerting. This is where we are serving these incidents and these risk alerts to customers across 150 categories. This is the scoring that we bring for, again, these 150 risk categories. It's the deeper supply chain visibility. The next step, of course, is to leverage AI also to derive more decisions and to derive more insights into a large sea of data combining both this view into the external risk, which we bring. the internal data that the customer has at hand. So what are my suppliers? What materials am I sourcing? Am I multi-sourced, single-sourced? What stocks do I have with those suppliers? And then to apply AI to derive insights and clear ROI out of the combination of these two data points. That is, I think, where it's going and where we are also driving as a company. Okay. Okay, so where can listeners go to learn more? And also, I suppose the second part to that is that what is the best way that they can explore whether your solution is the right fit for them? There's various ways. One of the easiest ones is to go to prewave.com and then there's a button, talk to an expert and you just book a meeting with somebody from our team. The other one is to join one of our events. So we have several events throughout the year that we host ourselves. These are industry connect events where we do automotive, manufacturing, energy, defense, bringing our customers from certain industries together. And another one would be to get in touch with one of our reference customers, something we also can happily facilitate. I think this exchange between the customers and prospects is also super helpful to understand What are the pros and cons and potential pitfalls of applying a solution like PreWave? Okay. And if you've provided us with links, I'm sure we can add those links into this episode in the show notes. Happy to do so. Yeah. Well, thank you, Harold. Thank you for this opportunity to learn more about PreWave's impact and unique value proposition. And thank you to everyone who joined us to learn more. Thanks for listening to this episode of ProcureTech Insider. if you found this conversation valuable you can subscribe to our procure tech specific newsletter the stack every thursday you'll get intelligence on procure tech companies market developments and insights from practitioners delivered right to your inbox to subscribe go to artofprocurement.com slash subscribe that's artofprocurement.com slash subscribe
