Proactive Supplier Financial Risk Assessment

What is meant by "proactive" risk assessment?

This solution automatically loads credit rating histories purchased from the likes of Euler Hermes and analyses the data to highlight risky suppliers. The trend is as important as the absolute value since the financial situation can move from good to bad relatively quickly. There are other signs of impending problems: late delivery, reduced quality, etc. but credit ratings are convenient.

When is a deeper dive necessary?

Credit problems can be a short term hiccup or they may be a sign of bigger issues. Whilst purchased financial data is often at least a year out of date, overall trends in turnover, profitability, assets, etc can provide a useful insight. If it looks like there may be problems, Hermetica recommends getting hold of the latest accounts rather than relying solely on published figures.

The impact of financial difficulties

Whilst this screen relies on information collected via XTAPS, if a supplier is in difficulty it is extremely useful to know which plants or offices are receiving goods or services, which contracts are affected and so on. It is especially useful to know if there are other companies, already known to the organisation, who may be able to step in if problems look likely (so that dual or multiple sourcing can be put in place).

Highlighting suppliers at financial risk

This screen presents suppliers at financial risk based on thier credit rating (Euler Hermes in this case). It uses a combination of current rating and historical trend to indicate those who are either in difficulties (red) or who are heading that way (yellow).

More information about the supplier

This screen provides a deeper dive into the supplier, in this case adding financial information purchased from Dun & Bradstreet (D&B). Any data can be plotted on the graph, and fields are provided for additional in-house intelligence to be added

A part level profile (using data obtained via XTAPS)

For a legible version click here. Sensitive data has been removed but this form lists the affected plants, parts, contracts,other suppliers in the group and possible alternative supliers - all important to know if an existing supplier is in trouble.