One of America’s largest heavy truck manufacturers needed to address unplanned supplier shortages, quality problems and, in some cases, even supplier bankruptcies. As part of a larger organizational improvement project, Percipio was engaged to conduct a supplier risk assessment and identify ways to mitigate risks at critical suppliers.
The challenge was four-fold:
- Assess criteria that contribute to supplier risks at a detailed level to identify critical suppliers
- Analyze root causes associated with the risk
- Define and implement mitigation measures at identified suppliers
- Support on-going supplier development programs
We applied a proprietary risk assessment model that assesses supplier risks holistically beyond typical quality and delivery metrics. Using both interviews and on-line surveys, Risks were assessed across six categories – Relationship, Performance, HR, Supply Chain Disruption, Financial Health, and Environmental Indicators. – and on potential impact to revenue, not on the typical spend metrics. This fully brings to light the revenue exposure of disruptions.
Assessment results were presented. Critical suppliers were identified and analyzed in greater depth. And we brought client and suppliers together in facilitated workshops that included root-cause analysis through Ishikawa diagrams. The joint team identified a clear action plan for risk mitigation and issue resolution based on the joint sessions.
The client was able to make informed decisions regarding supplier development and supply base optimizations. Mitigation actions at critical suppliers improved performance and reduced future risk. A training manual Percipio developed reduced time to integrate this approach across other business units, ensuring rapid realization of benefits in the future.
“If I had known what Percipio was capable of, I would have hired them sooner.”
-Director, Supply and Logistics