Any organization could manage supply chain risks that were known and understood well in advance. Unfortunately, that’s not the nature of risk. A newly-announced rating system from Resilinc, a provider of a risk/resiliency platform, though, hopes to get OEMs one step closer to that elusive early warning system by rating suppliers in the high-tech sector on their organization’s resiliency.
“If I wanted to evaluate two suppliers regarding financial risk, I would go and look at Dunn & Bradstreet,” Bindiya Vakil, CEO and founder of Resilinc told EBN in an interview. “However, with supply chain assessment there was no real industry standard or accepted source for supply chain health or risk management.”
Resilinc developed a measurable framework to understand how resilient a company would be in the case of an event. Called an “R Score,” it benchmarks Tier 1 and Tier 2 suppliers against their peers and competitors in terms of the ability to ship products on time, irrespective of internal and external challenges. “We hope that organizations will want to differentiate themselves against the competition and use the R Score as a vehicle for growth,” said Vakil. “We also hope it will be adopted widely by customers making sourcing or design decisions on new products.” It also offers an opportunity for suppliers to compare themselves against the competition and work to improve their risk management strategies. Any supplier can sign up to be scored for free.
At launch, Resilinc had rated over 3,000 suppliers in the high-technology sector. As part of its service over the last six years, Resilinc had collected a deep data set 40,000 companies selling more than 1.8 million part numbers across 115 countries. Using this data, the company has scored these companies (and will re-evaluate the scores quarterly). The rating is based on five elements:
- Transparency: Based upon the depth and breadth of information shared by the company with its customers during mapping. This element is the easiest for suppliers to address to better their score. Sharing information frequently and consistently demonstrates greater trust and develops a sense of partnership, Vakil said.
- Network: Considers a variety of factors including geographical dispersion, event impact assessments, natural disaster resistance, geopolitical stability, macro-economic strength of the locations performing supply chain operations. Shifting this element can be time-consuming and expensive for suppliers.
- Continuity: Assesses recovery time and business continuity capabilities of each of the company’s sites.
- Performance: Measures responsiveness s and ongoing performance metrics including financial stability, quality, delivery performance, etc.
- Supply Chain Risk Management (SCRM) maturity: Weighs supply chain visibility, event monitoring and management, proactive risk management and business continuity capabilities of the company.
Today, most organizations are under-invested in resiliency, Vakil said. “Companies haven’t invested really heavily in resiliency,” she added. For example, for transparency the scores averaged a score of 2 (compared to best in class companies who earned a 9). Continuity scores show underinvestment in robust business continuity capabilities, and low SCRM maturity scores show that companies are not taking ownership for managing risk of a supply chain disruption within their own supply chains. Best in class companies show true leadership as can be seen below:
There are huge lessons to be learned, then, from the leaders in the industry. Resilinc identified the 25 high-technology companies highest performing companies in the first and second tier of the high-technology industry. Click on the image below to start a slideshow of the best in class companies.
— Hailey Lynne McKeefry, Editor in Chief, EBN