CASE STUDY

How Supplier Risk Analysis Helped an FMCG Company to Improve the Product Quality through the Supply Chain

Jan 7, 2020

US FMCG Industry Overview 

Globalization and the fast improvement in high-quality products have created high levels of market pressure for companies. The number of agents involved in the supply chain network has increased, making supplier risk analysis very difficult. For this reason, companies have more delay points and greater uncertainties. Today, greater coordination, communication, and monitoring are required of firms. The obvious problem is that even a minor incident in one part of a supply chain can have disastrous effects on other parts of the supply chain network. Leveraging supplier risk analysis solution becomes imperative in such a situation to ensure the smooth functioning of the supply chain.

Business Challenges Faced 

The client is one of the leading distributors in the US FMCG industry that supplies their imported products to most of the Central American regional market. It distributes popular products with a high volume, and its major supply base includes 30 first-tier suppliers, which are mainly located in America. More than half of the first-tier suppliers are large firms and they are mostly located in Mexico. The company relies heavily on international suppliers. The company, therefore, wanted to examine risk quality from suppliers’ and customers’ perspectives to gain a specific insight into risks in their global supply chain.

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Our Research Approach 

The collection of accurate information related to supplier risks was complex and required analysis and an overall framework throughout the sourcing lifecycle. The experts analyzed all suppliers associated with the organization and identified four major risks. These included quality risk, price risk, technology risk, environmental risk. Based on the supplier risk analysis, the experts recommended a product quality risk strategy program to define action plans for improving the product quality through the supply chain.

The supplier risk analysis solution offered helped the client to terminate suppliers’ relationships with high risks. Also, the information about supplier’s sources and production practices improved visibility in the supplier production process. The client was better able to manage contracts with the main suppliers and implement rules with a quality test policy. The insights provided also helped the client to contract an external organization to inspect, evaluate and implement new companies’ practices in order to improve the flow of goods and information.

Engagement Outcome 

With the help of supplier risk analysis solution, the company gained better insights to improve, transparency, implement quality control programs, and reduce the product transit time. Risks associated with the organizational structure were identified and action plans were developed to increase the flexibility of manageable quality products.

Implementing a quality control program requires companies to improve the supplier risk analysis process. Subscribe now to enjoy free access to our web-based platform for better insights. 

Benefits of SpendEdge’s Supplier Risk Analysis Solution

  • Gain detailed insights into every attribute of a supplier’s financial stability.
  • Recognize and uncover hidden cost drivers in the customer-supplier relationship.
  • Better plan new products and services based on a good understanding of suppliers’ capabilities.

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