Sourcing Risk - Risk Index Recipe

In today's complex supply chain landscape, effectively managing risk around sourcing decisions is more critical than ever. Utilizing specialized tools can provide organizations with enhanced visibility into potential vulnerabilities, allowing them to proactively identify and mitigate risks associated with supplier reliability, geopolitical instability, and market fluctuations. These tools enable data-driven decision-making by offering insights into supplier performance and market trends, ultimately fostering resilience and agility. By adopting a systematic approach to risk management, companies can not only safeguard their operations but also seize opportunities for innovation and growth in an increasingly unpredictable environment.

Here is an example of a Risk Index you can create to help evaluate sourcing decisions. Check out the article linked below for more information on how to create a new Risk Index:

Risk Index Management in BOMs

Price History Trend Since Last Month %

Condition	Risk
Price History Trend Since Last Month % < 0	0
Price History Trend Since Last Month % > 0	70

Stock History Trend Since Last Month %

Condition	Risk
Stock History Trend Since Last Month % < 0	70
Stock History Trend Since Last Month % > 0	0

Supplier is on Preferred List

Condition	Risk
Supplier is on Preferred List = True	10
Supplier is on Preferred List = False	90

Number of suppliers

Condition	Risk
Number of suppliers = 0 OR Number of suppliers <= 1	90
Number of suppliers > 1	20

Stock

Condition	Risk
Stock = 0 (Overwrite)	100
Stock > 0 AND Stock < 10	70
Stock >= 10	10

Lead Time (weeks)

Condition	Risk
Lead Time > 12	75
Lead Time <= 12	25
Lead Time = 0	50

Lifecycle

Condition	Risk
Lifecycle = Obsolete OR Lifecycle = End Of Life OR Lifecycle = Not Recommended OR Lifecycle = Lifetime Buy (Overwrite)	100
Lifecycle = Active	1

Country of Origin

Condition	Risk
No Data	30
Country of Origin =	Specific countries and their associated risk can be set according to your individual needs