John Herr is the CEO of Avetta. He graduated from Harvard Business School in 1993, and has been with Avetta for 4 years. Avetta, formerly known as PICS (PICS Auditing), are a global supply chain risk management software company – they vet the risk, safety, sustainability and quality of industrial contractors all over the world. John brings more than 20 years of executive leadership experience in the cloud software, Internet businesses, global marketplaces, and financial services sectors and leads Avetta with a rich history of scaling growth-stage companies into large enterprises. He recently led the successful merger of Avetta and BROWZ, another leading provider of similar services in the supply chain risk management sector. Below, John walks us through Avetta and the life-changing services they provide to both customers and suppliers around the world.
Avetta utilises a two-sided customer model. On the one side is what we would call our enterprise clients: these are big, industrial firms that are global in scope, with an average of around $50 billion in revenue. This covers industries such as energy, chemicals, construction, material manufacturing, utilities, telecom, property management and more. With the recent merger between Avetta and BROWZ we have around 450 of these big enterprise clients, and what we do is we vet the risk and safety on approximately 3,500 of their work sites. “Work sites,” for us, is everything from a factory, refinery, drilling site, training station, airport, shipping terminal or office building, etc.
We then have 85,000+ active, paid contractors or suppliers that we vet on behalf of those clients. With customers in over 100 countries, it is a global network, however what we do is not about buying or selling their services – we’re all about the risk, the safety, the quality and sustainability and that experience you’re having on-site with experienced contractors and suppliers. As an example, some larger customers of ours are John Deer, Amazon, Duke Energy, BASF and American Airlines – some very large industrial companies all over the world. But, on the seller side of the model are often small and local companies, with fewer than 50 – 100 employees that do demolition work, welding, manufacturing plants in the UK, or mining work in Australia.
Bringing together these two customer bases is what we do, and we do it by vetting the safety and sustainability of our industrial contractors. This is a mix of asking questions and conducting audits. We have a 50,000 strong question engine and, as a client, you can adjust and specify those questions. We then collect certificates of insurance and safety manuals, confirm the validity of these materials, and audit their safety practices, hiring and training procedures, carbon footprint, and other potential issues such as bribery, drug trafficking or fatalities.
With a customer base and over 450 employees at the company all over the world, we’re growing rapidly – our world trade revenue is up 40% this year and the best part is that on average, we save 250 lives annually and prevent 10,000 serious workplace accidents by safeguarding against untold environmental damage and other hazards. One of the great things about what we do is our mission, which is all about improving the lives, safety and environmental impact of these clients and contractors, which could represent 5 million industrial workers around the world. The social impact is overwhelmingly positive, as you are saving lives and safeguarding the environment while promoting diversity and safe working practices.
The reason we changed our name from PICS to Avetta is simple – Avetta itself contains what we do, as we vet such important qualities of these contractors around the world. Our logo also encapsulates what we do, which is a pyramid that goes from red to amber to green, representing our flagging system: Red meaning high-risk or unsafe, green meaning safe or low-risk, and amber meaning questionable with some issues present. Our goal is to help these industrial contractors to become more sustainable, and that’s the concept behind the new brand of Avetta.
Building strong connections is what builds our network. Our network of 450 big enterprise clients is at the heart of what we do – similar to my work at eBay and PayPal, which are both network businesses, we bring buyers and sellers together in a safe, clean, transparent network. With the help of our cloud software, we can be in every country in the world, 24/7. We have auditors, call centres and people answering our phones in 30 different languages all over the world – it’s a very global business with the best of today’s software.
So: Who are we, how does it work, and how do you get value? It all comes down to certifying, screening, and examining the risk, safety and sustainability of these industrial contractors worldwide. Our core markets are in the UK, in North Western Europe, North America and Canada. We’re also starting to see rapid growth across Latin America, Australia and New Zealand are strong markets for us, and across Asia Pacific as well.
How is the supply chain model changing over time and how is this affecting the need for risk management?
The increase of complexity, outsourcing and the global nature of the supply chain for so many firms and suppliers plays to our advantage. In the instance of the trend towards outsourcing, in many of the industrial verticals that we play in, the significant majority of all the workers are outside contractors, so our model is set up to focus on the supply chain – the outside contractor, the worker, and not the internal employee.
The trend of safety started in earnest 40 or 50 years ago, and that has been a very powerful and positive thing. However, most of what’s out there today are these big enterprise clients either managing their supply chain and risk management themselves, using home-grown solutions that may not be done very well, or not taking risk management into account at all. When upgrading to professional services like Avetta, we make the process simple so that it can also be cheaper, faster and more thorough with better safety outcomes.
What procedures are in place at Avetta to establish the validity and level of risk one might face with their potential supply chain partner?
We start out with our massive question engine, tailored to the clients, which is used to collect data from safety manuals, insurance, incident reports, fatalities, accidents, environmental incidents and so on. We verify this and then conduct a safety audit of them. All of this data is then enclosed in our system and in the software. Because this is custom-configured for the client, what may be a red flag for one client could be a yellow flag for another, or a green for another—it’s completely customized to them.
What value do these services offer for suppliers and contractors?
The two-sided customer model means that on the client’s side, it’s cheaper, faster and more thorough with better safety outcomes. This can take a lot of resources and be highly expensive and cumbersome, so most companies don’t do our depth or scope of vetting, which can lead to major lawsuits, accidents and death; this in turn leads to legal costs (litigation, settlements, etc.), loss of company focus and reputational or brand damage. When you have a lot of safety and risk issues, your quality, efficiency and productivity is hindered. On the client’s side, there is a whole host of benefits from saving lives to saving money.
On the supplier’s side, it’s about keeping their workers safer. We make sure that our suppliers have adequate and proper insurance coverage, and by creating partnerships with insurance companies, we could save them 10 – 15% of the price and get them better coverage. In fact, we just launched the Avetta Marketplace—an online platform providing our network community of clients and suppliers access to discounts on safety training, insurance, PPE, tools & equipment, travel, internet & software, office supplies, payroll tax services, fleet services and more.
We’ve always had a job-creating function where we try to match good contractors to clients, because when you help a small business find work or drive up their revenue, you’ve created a friend for life. Helping these small-business contractors with client relationships and helping them find quality trade’s people is something that they view as highly valuable. The value proposition of both sides, be it the client or the contractor’s side, is very strong.
How does your technology solution benefit customers?
The biggest benefit is due to our processes through cloud software. This means that our huge client base and contractors around the world can access the system any time, all year long, and all of the records and analytics are accessible to them. Clients can do real-time performance reviews, and because of that, we can also be much more efficient. This integration makes communication across their systems easy to manage and empowers them to make better decisions. We estimate that clients handling risk management on their own, to the same level of quality that we do, is going to cost them five or ten times more. We have the scope, the network effects, and the technology platform to accomplish this in an intuitive and cost-effective way.
Above all else, what would be your greatest piece of advice for ensuring the best possible relationship between a company and their supply-chain partner?
I would say open communication is key, with clear expectations, outlining what’s important, what the objectives are, what’s working and what’s not. Transparency and the data with all of the facts; and this is what we really try to facilitate through our system, which is extremely powerful.
Looking to the future, what does 2019 hold for Avetta? Is there anything exciting that you can share with us?
2019 is going to be a very big year for us. We’ve invested heavily in expanding our product and services and underlining the technology platform. We have traditionally been vetting the contractor or supplier company – we are now, through acquisition and also through our own internal investment, rolling out a worker product that helps to vet the workers, whether it’s the individuals or the equipment and material they’re using. We’re seeing massive growth, we’re very proud of our associates that work with our clients around the world, and we will be adding more countries where we have offices for a further global reach.
We have a very low turnover of employees and high engagement, which returns to us as customer retention and satisfaction as well. We invest in a lot of opportunities to train and promote our employees, making us the fastest growing company in our space in terms of revenue growth.