Proactive Risk Assessment: Manufacturer Risk Follow

Supply Risk Navigator is an Insights-to-Action component in the LevaData platform which enables a Business Continuity Manager to protect margins and revenue by facilitating both proactive and reactive risk monitoring, risk impact assessment, and risk mitigation and response. We refer to proactive monitoring as it pertains to the evaluation of structural risks in the supply chain, while reactive monitoring and evaluation facilitates assessment and response in the event of a crisis.

Manufacturer Risk

When a user selects Supply Risk on the left-hand navigation menu, they land on the first tab of the Supply Risk module which is Portfolio Risk. The two sub-tabs Portfolio Risk and Manufacturer Risk provide summary information both of these topics. This article is focused on the sub-tab Manufacturer Risk, which seeks to provide the Global Commodity Manager (GCM) everything needed to address manufacturer risk analysis and risk mitigation actions. For the article on Portfolio Risk, please see: Supply Risk Navigator - Portfolio Risk.

The GCM can create a commodity filter in the scope menu at the top of the page that is accessible each login with a simple click or use the controls filter within the tab to filter important views.

Some users will want to focus specifically on manufacturers because of a responsibility to evaluate and make decisions when issues arise. This tab indicates risk exposure by manufacturer, including spend with each manufacturer by commodity and product.

Risk Factors and Manufacturer Risk

The first section ranks risks of each type and has a set frame of reference (usually the next four quarters).

Reason codes are used to help explain which factors are contributing to a high-risk score, if you see abbreviations that you aren't familiar with, scroll up to the top for the reference table.

Risk Magnitude calculations are listed in the module on the top reference table but are repeated here for reference. Risk Magnitude is defined by distribution formulae giving an index between 0-100.

The Manufacturer Risk Prioritization is a Kraljic Matrix which is a method used to segment based on the risk and the importance of the purchases by impact that they have on sales. This subdivision allows for definition of the optimal purchasing strategies. It offers information on how many manufacturers fit into the various categories represented and the page can be filtered by selecting any box in the matrix.

Manufacturer Spend by Product Family

Breaks down your organization's filtered spend by product family, hovering over these values prompts tooltips with the exact spend amount and number of CPNs. You can click into any of the product families listed to filter the rest of the data in all other charts and tables to only information impacting that product family.

Top 50 Manufacturers by Risk

A bubble chart that evaluates manufacturers on the highlighted criteria, moving up with Y-Axis with share of company spend, moving up the X-Axis with LevaData evaluated risk calculation, and increasing in size with product family revenue impact. Hovering over one of the bubbles as indicated below produces a detailed tooltip of the stats which makeup the manufacturer composite. Like other data elements of the module, you can click one of the bubbles to filter down data in other tables and charts to only apply to that manufacturer.

Manufacturer Risk Factors

Slightly different from the table above which shows manufacturers and their product impact. This table just plainly evaluates manufacturers on publicly available financial information, customer and community internal information on delivery and quality, and then additionally presents:

• Single Source CPNs and the amount of spend on them.
• Filtered Spend, which is the spend on that manufacturer's parts for the current quarter plus the next three quarters.
• Product Sales Impact (also known as revenue impact), is the revenue that would at risk if this manufacturer's parts were to become unavailable. It is calculated by finding all the products where those parts are used and calculating the sales revenue for the next four quarters that would be impacted if they became unavailable.

Example: Evaluating One Unique Manufacturer

Drilling into one manufacturer by clicking on them in any table filters the rest of the available data to make it only apply to them. This detail gives the user everything about the manufacturer and how they are impacting products.

Users can see how their spend with the associated manufacturer is spread across their product portfolio:

Users can see that Manufacturer's MPN Risk Factors, in this case very few except for some high lead times and one very long-term Years to End of Life (YTEOL) risk.

Users can also see that Manufacturer's CPN Risk Factors, in this case several single-source risks with potential time to requalify risks, all of which would hypothetically impact the product families above if those parts cannot be attained from this single source.

MPN Risk Factors

Allows users to see which manufacturer part numbers have the highest risk, which is calculated in combination with years to end of life for the part, how long of a lead-time the part has, and impacted sites (explained below)

Impacted Sites

The MPN Risk Factors Table indicates if the manufacturing sites for the MPN are potentially impacted by a negative event.

• The indicator is "Yes" if any of the possible manufacturing sites are potentially impacted.
• The indicator is "No" if none of the possible manufacturing sites are possibly impacted.
• The indicator is left blank if there is no information about Country of Origin (COO) or MPN manufacturing sites is available.

Note: If Part-Site maps are not available, COO is used as a proxy and all known manufacturer sites in that country are used as potential manufacturing sites.

CPN Risk Factors

Total CPN Risk is a function of Aggregated MPN Risk and Sourcing Strategy Risk (described below)

Aggregated MPN Risk

Aggregated MPN Risk indicates the total risk for the currently qualified MPNs and effectively reflects the health/risk of the aggregated MPN pool associated with the CPN.

• Aggregated MPN risk aggregates individual MPN EOL, Lead Time, and Manufacturer.
• Example: if there are two MPNs associated with a CPN/Manufacturer and one MPN is near EOL, while the second (replacement) MPN has extended life (long EOL), the "Aggregated MPN" risk conferred from EOL will remain low.
• Users can drill into the individual MPN details by selecting a CPN in the CPN Risk Factors table and then analyzing the MPN in the MPN Risk Factors table

Sourcing Strategy Risk

Sourcing Strategy risk is a function of the number of (manufacturer) sources for a given CPN, the Inventory Strategy, and the time-to-requalify a new/replacement part.

Individual "raw" CPN risk factors - # Sources for CPN, Time to Requalify, Strategic Inventory (VMI) - as well as the Spend and Sales Impact factors - Filtered Spend and Product Sales Impact - are all referenced in the table.

Geography

When hovering over a bubble on the world map, you will see a pop-up tooltip with the top risk manufacturers. In the chart on the right, spend is broken down by countries of origin (COO) and clicking on any of those bars can drill the rest of the data in the tables above to that specific country or countries of origin. If a given part is manufactured in two different countries both will be listed (e.g. Indonesia, Japan in the example below) and that value will not be carried over to the unique individual country value.

Learn More About How to Use Supply Risk Navigator

• Supply Risk Navigator: Overview of Use Cases