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Reducing the Probability of Supply Risks by 50% for a Heavy Machinery Company by Performing Supplier Risk Assessment

Heavy Machinery Sector Overview 

The manufacturing/industrial engineering sector accounts for over 20 percent of the GDP in Sweden, with advanced manufacturing bringing in approximately USD 40 billion. Manufacturers are early adopters of new technologies alongside traditional tooling. They are keen to turn their production facilities into factories of the future with quick response capabilities, flexibility, and reduced risks. This case study is a classic example of how we helped a leading manufacturer to improve flexibility and reduce supply risks.

Business Challenges Faced 

The client is one of the leading companies in the heavy machinery sector that supplies products and services to both domestic and foreign customers. The company produces highly customized and configured products and uses a make-to-order production strategy to be more flexible to product variability. The company has a diverse set of suppliers for different parts to produce mills and their performance impacts the sustainability of the company. However, they were facing significant supply risk problems by overlooking supplier-related risks.

Performing a supplier risk assessment is crucial for companies to develop effective supplier management strategies. Request a proposal to access our supplier risk assessment solutions for FREE now!

Our Research Approach 

The experts at SpendEdge understood that supply risks could be addressed by eliminating unreliable and risky suppliers. This could be achieved by considering the risk level of suppliers. Therefore, they analyzed key suppliers as the most critical suppliers of the company and selected them for analysis. A proprietary supplier risk assessment model was created to evaluate suppliers based on purchase price variance, financial condition, manufacturing capability, flexibility. Factors such as technological capability, the average defect rate of the supplier, quality management, supplier lead time variability, ease of communication, reliability, and after-sales service were also critically examined to determine the risks.

Moreover, the raw data were examined to gain insights into the risk structure of each supplier cluster and provide more accurate information. This helped the client to identify suppliers with the highest risk profile. A supplier management program was then developed based on the results of the analysis to eliminate suppliers with a high-risk profile. The interpretations of the results also provided insights for supplier risk management actions to mitigate supply risks.

Wondering how you can develop an effective supplier risk assessment template and gain insights to mitigate supply risks?

Reach out to our experts for customized supplier risk assessment solutions.    

Engagement Outcome

SpendEdge’s supplier risk assessment solution helped the heavy machinery company to analyze risks related to the capabilities of the supplier. This enabled the client to procure parts and equipment at better prices and reduce the probability of supply risks by 50%. Additionally, the customized supplier risk assessment report provided the client with much-needed information on suppliers’ reliability, operational risks, and price risks, thereby reducing the supply risks significantly. 

Conducting supplier risk assessment involves performing cluster analysis and understanding risk structure of each supplier cluster. Subscribe now to enjoy free access to our web-based platform for better insights and supplier risk assessment solutions. 

How to Perform Supplier Risk Assessment?

  • Identify the vendors that present the most risk to the business. 
  • Create a supplier risk assessment template to find about the vendor’s policies, processes, and procedures. 
  • Develop an appropriate supplier risk management strategy to mitigate the risks. 
  • Depending on the supplier and their risk profile, order more supplier risk assessments on a more regular basis. 

To know how you can develop an effective supplier risk assessment framework, request for more information from our analysts.

Construction industry

A Step-by-Step Guide for Effective Supplier Risk Management

With the rise in globalization over the last few decades, supplier risk has increased substantially. Companies of today are tasked with coordinating global strategies for meeting regulatory requirements, assessing risks, and mitigating them – all while maintaining the optimal productivity levelsThe problem increases manifolds in the complex global marketplace. Today, supply chain managers deal with numerable financial risks, which range from stockholder profits to compliance issues. A failure to improve supplier risk management can result in significant monetary losses for the company such as reputational damage, regulatory penalties, and production delays.

At SpendEdge, we understand the importance of supplier risk management for the smooth functioning of businesses. Therefore, in this blog, we are highlighting the step-by-step process that can lead to better supplier risk management.

Establishing a supplier risk management system is imperative for companies to mitigate risks. Request a free demo and know how you can build an effective supplier risk management system for your company.

How to Manage Supplier Risk?

Step 1: Certify

Selecting a supplier is not easy and comes with its own set of challenges. A strong supplier risk management process mitigates that risk by incorporating values into the current metrics and ensuring that suppliers associating with the company are able to meet their deadlines on time. It basically requires you to practice these functionalities in supplier risk management:

  • Gaining expertise about the marketplace.
  • Asking the precise questions in the RFP process during the bid.
  • Verifying the information provided by suppliers against a third-party source.
  • Centralizing information for established suppliers.
  • Repeat the information to keep it updated.

Step 2: Monitor

Not every supplier holds equal value for your business. Strategically identify suppliers who are important for your supply chain and those who can cause disruption in the manufacturing line or services. Evaluating suppliers strategically and critically will help you determine the types of risk levers that can affect suppliers or the supply base. This supplier risk management process will require you to:

  • Determine the sources of information that needs to be monitored.
  • Establish a supplier risk management framework that can monitor external and internal in real-time.

Want to know how you can strategically identify suppliers and reduce chances of supply chain disruptions?

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Step 3: Analyze

Implement technologies to reduce the amount of time and effort required to analyze and create reports that can increase visibility and provide actionable intelligence. Areas to analyze can include financial risk, supplier performance, or spend category depending upon the profile of your company.

By repeating the supplier risk management process over regular intervals, you will gain a better understanding of how your supplier performs and what are the acceptable behavior thresholds. The points you should be addressing while analyzing are:

  • The performance of your organization.
  • The supplier’s performance against service level.

Step 4: Mitigate

Since predicting a suppliers failure with complete accuracy can be a difficult task, you can always compensate for the same by planning for it. Proactively prepare for these potentially damaging supplier disruptions with the supplier risk management in place. Also, developing a supplier risk assessment process, building contingency plans by documenting competitive suppliers can help improvise plans according to the updated information.


Wondering how supplier risk management can help your organization? Get in touch with our experts today!

4 Effective Strategies to Make Strides in Supplier Relationship Management

Supplier relationship management (SRM) is an integrated approach that addresses and provides benefits for both the buyer and seller sides. It should be noted that not all suppliers are the same, so not all customer-supplier relationships should be dealt with through a single strategy. The typical goal of supplier relationship management is to streamline and improve processes between a buyer and its suppliers. It is all about developing a mutually beneficially relationship with suppliers, especially those deemed as most strategic to the brand, to promote quality, efficiency, and innovation among several other benefits. As with many procurement activities, at the most basic level, supplier relationship management can be used to reduce both prices paid and costs to the organization. Developing appropriate styles of interaction can also make it is possible to save money. The key to developing an effective supplier relationship management approach is a well-understood supply base.

Strategies for better supplier relationship management

Leverage technology

Investing in a good supplier management software helps companies keep track of information about their suppliers in one place. Companies can also take one step further and install an advanced purchase order management software which is useful in creating, processing, and tracking purchase orders with the suppliers.

Ensure timely payments

Fulfillment of payments on time is a vital element of an effective supplier relationship management. This is also a critical step in ensuring that the company’s valuable suppliers are not lost. Timely payments also facilitate companies to establish their credibility and reliability as a customer to their suppliers. Just like companies like to receive prompt delivery of goods and services from the suppliers, the suppliers expect prompt payments. In case companies are unable to make payment on the date agreed, then they must inform the supplier as soon as possible with the date on which they can expect the payment.

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Make detailed agreements

Supplier relationship management is a non-negotiable in the case of companies that buy from a vendor on a regular basis. Begin by listing out what both parties expect from the partnership such as item or service description, price, delivery terms, payment terms, and communications. Then have both parties sign it. The complexity of this document depends on the business requirements. A well-documented supplier relationship agreement reduces the possibility of confusion or disputes and paving way for better supplier relationship management.

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Supplier Risk Analysis Solution Assists a Renowned Industrial Packaging Client to Mitigate Supply Chain Risks

Overview of the Industrial Packaging Industry

Industrial packaging typically involves the storage, protection, handling, and transportation of various industrial products within the industry or with other end-use sectors. Industrial packaging can also be defined as the secondary or tertiary packaging used for packing products required for industrial purposes. The industrial packaging is available in multiple designs and shapes and is suitable for several applications in end-user industries, such as chemical, pharmaceuticals, construction, and food and beverage. Rise in building and construction activities in emerging economies like India and China and improved growth of the food and beverage industry to meet the demands of the growing population are some of the noteworthy factors that are expected to fuel the growth of the industrial packaging industry.

Nevertheless, the growth of the industrial packaging industry is vulnerable to certain factors, which include:

  • Regulatory Trends and Pressures: Life cycle analysis is a critical process for estimation and comparison of the environmental impact of diverse Additionally, it is now being recognized that life cycle analysis should not only be performed on the packaging alone but should also be a vital component of the calculation of the environmental impact of the entire packaged product process.
  • Assessing Sustainability: Presently, packaging contributes toward the sustainability of a packaged product and must be planned holistically with a product to enhance overall environmental performance and minimize product damage, wastage, and spoilage. However, no packaging solution is entirely sustainable, and packaging materials cannot be classified as good or bad. All the materials have their benefits and shortcomings depending on the tradeoffs, and product application necessary to arrive at an optimum position.

These challenges are compelling industrial packaging firms to leverage the use of supplier risk analysis solutions.request free proposal Supplier risk analysis solutions help businesses reduce vulnerability and ensure proper continuity in the supply of raw materials. These solutions also help companies in the industrial packaging space to identify, evaluate, and mitigate supply risks across the supply chain.

The Business Challenge and Journey

The client, a leading industrial packaging firm with business operations spread across the globe wanted to ensure that the suppliers are appropriately monitored and managed throughout the supplier lifecycle. Additionally, the client wanted to identify, evaluate, and mitigate supplier risk and gain improved visibility into their supply chain processes. With the help of supplier risk analysis solutions, they also wanted to seek ways to profile the prominent suppliers within the industrial packaging space and devise robust risk segmentation analysis to assess supplier capabilities.

The supplier risk analysis experts at SpendEdge carried out an extensive research methodology to help the client address rising concerns and reduce supply costs. The research methodology included primary research coupled with qualitative and quantitative data collection and interviews and discussions with leading procurement experts within the industrial packaging space.

During the course of this supplier risk analysis engagement, the industrial packaging client gained insights into the supplier contingencies which helped them enhance their visibility into the supply chain patterns. This engagement also helped the client gain real-time insights into the supplier performance from manufacturing of raw materials to the delivery of the finished product to the audiences.

Fundamental questions answered in this supplier risk analysis

The Results

With the help of SpendEdge’s supplier risk analysis engagement, the industrial packaging client eliminated the likely bottlenecks including delays in the launch of products and services, discrepancies in supply, and environmental safety and health concerns. This engagement also helped the client reduce the time-to-market for their offerings.

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Supplier Relationship Management Helps a Global Construction Industry Client Build a Superior Competitive Advantage

Category Overview

Lately, the construction industry has witnessed a steady growth, primarily due to the major works occurring in high-profile projects including the electricity, water and sewerage, and rail sub-sectors. However, according to the supplier relationship management experts, firms operating under razor-thin profit margins are expected to struggle with rising material and labor costs. As a result of these challenges, players operating in the construction industry space have started opting for supplier relationship studies to build better relationships with the suppliers. Moreover, these studies offered by SpendEdge, help firms in this industry space to gain a superior competitive advantage over their peers.

The Procurement Pain Point and Insights Offered

A global construction industry client wanted to devise a superior relationship strategy with suppliers in the market space and create a win-win situation and increase the profitability of both parties. The client also wanted to design a robust value creation framework for a better customer and supplier relationship. Furthermore, the client wanted to gain a comprehensive understanding of the latest developments and trends in the market and identify the potential supplier risks across the supply chain.request free proposal

To cater to the specific category requirements of the client, the supplier relationship management experts carried out an in-depth two-step research methodology, which included qualitative and quantitative assessments. During the course of this supplier relationship engagement, the construction industry client gained insights on the control points in the value chain that was currently being captured. Additionally, the client was provided with an explicit representation of the merits and prioritization of the opportunities with the help of a robust portfolio analysis.

Fundamental questions answered in this supplier relationship management study include

Construction IndustryBusiness Outcome

This supplier relationship management engagement helped the construction industry client build a superior competitive advantage in the market space. Additionally, the client was offered suggestions on superior supplier relationship strategies to seize opportunities.

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Supplier Risk Analysis Helps an Automobile Industry Client Assess Risks Associated with the Procurement of Automotive Components

Category Overview

Over the past few years, the unremitting growth of technology has put automobile industry manufactures under tremendous pressure to increase their visibility through robust product offerings. Additionally, suppliers in this industry space play a crucial role for automobile industry manufacturers to efficiently track and monitor their production line. As a result, leading firms in the automobile industry space are effectively working towards enhancing their supplier relationship and building trust with suppliers to improve profits and ROIs. Firms have also started adopting supplier risk analysis studies to assess the risks associated with the procurement of automotive components and improve the quality and delivery of supply chain activities.

The Procurement Pain Point and Insights Offered

A renowned client in the automobile industry was facing predicaments in understanding the macro and micro-economic risks associated with the procurement of automotive components. The client further wanted to understand and profile their suppliers and comprehend the risks associated with them. Moreover, to gain a stronger foothold in the automobile industry, the client wanted to devise superior mitigation strategies across the supply chain.request free proposal

The supplier risk analysis experts at SpendEdge devised a comprehensive two-step research methodology that comprised of primary and secondary research coupled with qualitative and quantitative data collection methods to cater to the specific category requirements of the client. During the course of this supplier risk analysis engagement, the renowned automobile industry client was able to identify the significant risks associated with subsidiaries across the globe. Additionally, the client was also able to monitor the supply chain, enhance supplier service, shorten time-to-market, and improve product quality.

Fundamental questions answered in this supplier risk analysis study include

automobile industryBusiness Outcome

This supplier risk analysis engagement helped the automobile industry client assess risks associated with the procurement of automotive components and devise robust mitigation strategies across the supply chain to minimize the risks. Additionally, the client was able to gauge the pricing strategies under fluctuating market conditions with the help of a flexible modeling tool.

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Supplier Risk Assessment for a Chemical Industry Client Helps Pre-screen Suppliers by Category

Category Overview

Over the years, the global chemical industry has experienced strong M&A activities as companies are pursuing growth, realigning their portfolios, and increasing their focus on core competencies. Additionally, the growth of this industry can be attributed to the increasing urbanization in developing nation, which is driving infrastructure and public housing projects. However, according to the supplier risk management experts at SpendEdge, the fluctuating prices of raw materials and selecting the right supplier in this industry are some of the factors responsible for the sluggish growth of this market.

Consequently, to gain a stronger foothold in this market space, chemical industry companies across the globe have started opting for supplier risk management studies to pre-screen suppliers by category and develop better negotiation strategies.

The Procurement Pain Point and Insights Offered

A leading chemical industry firm wanted to trim down the list and build a due diligence plan. They also wanted recommendations on a risk-based approach to manage this issue. The chemical industry client also wanted to gain regular updates on the performance of the key suppliers and keep themselves informed about the latest developments in the supply market.request free proposal

The supplier risk management experts at SpendEdge conducted a comprehensive research methodology, which included primary and secondary research and qualitative and quantitative data collection methods to cater to the specific business requirements of the client. During the course of this supplier risk management study, the client was able to determine the level of due diligence to conduct on the higher-risk suppliers based on dollar spend and location. The client also gained insights into the performances of the key suppliers and the latest developments in the supply market. They also gained recommendations on a strategic risk-based approach to trim down the extensive list of suppliers and select the right suppliers by category.

Key questions answered in this supplier risk management study include

Supplier Risk ManagementBusiness Outcome

The supplier risk management solution helped the chemical industry client pre-screen suppliers by category and develop better negotiation strategies across the supply chain. Also, the due diligence map helped them build a smaller list of suppliers in particular categories.

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procurement risks

Supplier Risk Management for a Fortune 500 Financial Industry Client

Category Overview

Today, the supplier landscape is continuously witnessing expansions and contractions due to the ever-changing regulatory pressure. A recent study predicts that the spending on supplier risk management is expected to witness a robust surge in terms of staffing for risk management. The regulators in the supply risk management space are focusing on operational risk management while managing the suppliers on an ongoing basis. In the financial industry, procurement organizations are facing various operational, financial, compliance, and industry risks. To mitigate the aforementioned challenges, leading financial services companies are advocating the need for supplier risk analysis. Effectively devising supplier risk management helps businesses proactively identify third-party risks by developing a comprehensive risk management strategy.

To mitigate vulnerability and ensure business continuity in the financial industry, the client approached SpendEdge’s supply risk management experts. With years of expertise in offering services, SpendEdge’s supply management analysts assist the client to effectively analyze data using various relevant metrics and multiple sources of inputs in the financial industry; thereby, reducing business uncertainties.

The Procurement Pain Point and Insights Offered

With the shift towards a cost-driven environment, leading financial firms are relying on efficient supply risk analysis to manage their business effectively. A renowned financial firm was facing predicaments in curtailing their costs while continuing to grow their business. Also, the client was facing challenges in achieving a balance between regulatory expectations and operational effectiveness. Furthermore, the client was facing predicaments making the contracting process efficient while managing suppliers. The client wanted to make the contracting process efficient and flexible, enable better management of suppliers, and reduce additional costs associated with supplier management.

To mitigate the risks associated with supply chain management, SpendEdge’s supply risk analysis experts followed a blended approach comprising of interviews and discussions with leading stakeholders in the financial industry. In addition, the experts further compiled information from various proprietary sources such as paid industry databases, company presentations, industry forums, and newsletters in the financial industry.

After gauging through the available information, the client gained a holistic view of the vendor risk, the policies, and was further able to carry out a robust risk calculation. Through an effective engagement, the client was also able to automate and streamline the vendor risk process.

SP- Supplier risk assessment

Business Outcome

By leveraging SpendEdge’s solution, the client was able to increase efficiency and transparency into their vendor risk programs. Moreover, the engagement helped the client to create a centralized repository to capture the vendor’s profile and reduce the overall operational cost. The solution also helped the client implement risk management process to address the key requirements of the customers.

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Supplier Risk Management: Assessing Supply Chain Impact for a Personal Care Products Manufacturer

Category Overview

The personal care products industry includes products that are used for personal hygiene and beautification. Key factors fueling the growth of the personal care products market are increasing consumer inclination towards maintaining and enhancing personal aesthetic appeal, growing concerns about personal hygiene, and rapid growth of the retail industry. However, growing consumer inclination towards homemade remedies such as honey wash, high product costs, and lavender cream may pose a significant challenge for personal care products suppliers.

The presence of such challenges in the market coupled with the dire need for increasing profit margins in today’s competitive business scenario has compelled personal care products manufacturers to opt for supplier risk management services. Such solutions help businesses build capabilities for logistics, credit management, and other peripheral functions.

The Procurement Pain Point and Insights Offered

A global personal care products company wanted to identify and develop a list of supply chain frameworks and sourcing practices employed by competitors’ firms specializing in personal care products. They also wanted to conduct a deep-dive analysis of the market space to identify numerous categories of vulnerabilities across the supply chain.request free proposal

To address the client’s issue, the supplier risk management specialists at SpendEdge followed an in-depth two-step research methodology, which included primary and secondary research coupled with qualitative and quantitative data collection procedures to cater to the specific category requirements of the client. During the course of this supplier risk management study, the client was able to identify the most critical supplier risks based on several aspects including relationships, political risks, distribution and logistics operations, and geography. Additionally, the client was able to increase their focus on the crucial operational areas directly related to the risk and map them with the key interdependencies and current mitigation strategies.

Key questions answered in this supplier risk management study include

Supplier Risk Management

Business Outcome

The supplier risk management engagement helped the personal care products manufacturer identify functions and best practice to increase revenues. Additionally, the client was able to determine the major suppliers and their key service offerings. This helped the personal care products manufacturer negotiate contractual terms better. Furthermore, the supplier risk management solution offered by SpendEdge also helped the client build capabilities for logistics, credit management, and other peripheral functions.

To know more about our supplier risk management solutions?

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Supplier Risk Assessment Enables a Specialty Chemicals Supplier to Identify High-Risk Suppliers

Category Overview

Lately, chemical suppliers have started opting for supplier risk assessment studies to realize the risks associated with the supply chain. The primary objective of this study by SpendEdge was to provide companies an all-inclusive representation of the critical suppliers to develop a robust supplier strategy.request free proposal Additionally, the supplier risk assessment study also provided detailed information about the suppliers including details about the product portfolio, key executives, and financial announcements.

The Procurement Pain Point and Insights Offered

A leading specialty chemicals supplier wanted to assess and form an operational database for the ongoing logging and management of all third-party supplier risks. The specialty chemicals supplier also wanted to gain regular updates on the performance and news specific to the key suppliers and stay well-versed on the latest developments in the supply market. Furthermore, they also wanted to monitor the other suppliers and help keep the category managers informed about any potential risks.

The supplier risk assessment specialists at SpendEdge conducted a blended research methodology, which included primary and secondary research and qualitative and quantitative data collection methods to cater to the specific business requirements of the client. During the course of this supplier risk assessment, the client was able to collect the baseline information of all critical suppliers and their performance and risk levels. Additionally, the supplier risk assessment also helped the client gain a clear picture of the risks associated with their critical suppliers and develop strategies to tackle any potential trouble in the supply market.

Key questions answered in this supplier risk assessment include

risk assessment

Business Outcome

The engagement provided the specialty chemicals supplier with an in-depth information source for supplier data management and risk. The information furnished was utilized by the client’s procurement department, information security department, and data protection officer to actively manage supplier data privacy risks. Additionally, the supplier risk assessment also helped the client to identify high-risk suppliers and received a detailed assurance review at no cost.

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