CREATING A CLEARER LENS TO

YOUR SUPPLIER RISK

Sarbajit Sen
KEANSA SOLUTIONS
SARBAJIT SEN
Head of Products and Solutions
S&OP Center of Excellence
Keansa Solutions Pte
The Risk Reality
• Supply Chains are more global and interconnected now
• More susceptible to disruptions
• Geopolitical
• Natural
• Market
• These disruptions can cause severe impact
• Monetary
• Sustainability
• Reputational
Focus of this session: Supply Risks
• Our focus for this session is on Supply Risk
• Material
• Supplier

• Traditional ways of looking at Supply

• Usually focused on Cost and Lead time
• Often less attention given to risk
• This perspective needs to change – risk now recognized as gaining importance in supplier
selection

• Long enduring strategies are under the lens

• The decision to Off-shore
• Emergence of new terms
• “Back-shoring”
• “Friend-shoring”
CREATING A CLEARER LENS TO
YOUR SUPPLIER RISK
Clear Lens to Supply Risks
Why are we talking about a “Clearer Lens”?

• Without clear understanding of risk, developing resilience is not possible

• In this session, we will touch upon ways to:

• Enhance our risk perception
• Develop a clear view of risks
• Design a decision system to manage risks
• Enable execution with risk in mind
Resiliency Framework
• Risk Identification
• Enhance awareness of the risks we are exposed to
• Risk Assessment
• Evaluate the nature and impact of these risks
• Risk Mitigation
• Develop policies to proactively mitigate their occurrence
• Response
• Find ways to minimize impact when a risk becomes real
Risk Identification
a) Material Risks
• Relates to the nature of the materials
• Availability
• Price
• Banned substance
b) Supplier Risks
• Geopolitical and natural calamities
• Compliance
• Labour laws
• Financial position
c) The risks often exist in the intersection of Material and Supplier
• Risk of sole supplier in an unstable geo-political or climatic zone
Risk Identification: Risk Categories
Risk Type Risk Category

Sole Source Supplier Risk

Single Source Supplier Risk
End of Life (EOL) Material Risk
Restriction on Hazardous Substance
Material Risk
(RoHS)
Compliance Supplier Risk
Supplier Health Supplier Risk
Market Volatility Material Risk
Supply Assurance Supplier Risk
Risk Events Supplier Risk
Supplier Compliance Supplier Risk
Business Continuity Plans Supplier Risk
Supplier Performance Supplier Risk
Risk Assessment: Information Requirements
Risk Type Risk Category Information Sources
Sole Source Supplier Risk BOM, Material Master, Supplier Master

Single Source Supplier Risk BOM, Material Master, Supplier Master

End of Life (EOL) Material Risk Supplier

Restriction on Hazardous Substance (RoHS) Material Risk External

Source Compliance Supplier Risk External

Supplier Health Supplier Risk External

Market Volatility Material Risk External

Supply Assurance Supplier Risk Supplier

Risk Events Supplier Risk External

Supplier Compliance Supplier Risk Supplier

Business Continuity Plans Supplier Risk Supplier

Supplier Performance Supplier Risk Performance Metrics

 Risk Assessment – FMEA Tool
FMEA: Failure Modes and Effects Analysis (FMEA) is a systematic, proactive method of identifying different ways
a process can fail, prioritize them, and create well-defined action plans for prevention and mitigation.

Risk Event Likelihood Severity Detectability Risk Score Action Plan

Unavailability of imported …..
4 8 5 160
pigment from sole supplier
Ban on polystyrene and …..
10 6 2 120
expanded polystyrene
Unavailability of packaging …..
3 7 5 105
material
PET market price …..
3 6 4 72
fluctuations
Transport strikes 2 9 3 54 …..
Fault in custom mould 3 8 1 24 …..
Supplier Risk Score
• Identify high-risk suppliers based on risk categories
• If possible, come with a Risk Score Value (could be qualitative)
• Business decisions could consider both performance and risk scores
to guide execution via planning tools
Supplier Performance Score Risk Score Supplier Segment
Supplier A High Risk
Supplier B Medium Risk
Supplier C High Risk
Supplier D Medium Risk
Supplier E Low risk
Supplier F High Risk
Risk Mitigation
• Strategic Level – Drives policies
• Review sole and single source suppliers
• Map out supplier network for high risk materials
• Prioritize local supply that reduce risk
• Alternate BoM / Recipe to reduce specific material risks
• More stringent supplier audits
• Fleet augmentation

• Operational Level – Drives plans

• Risk score-based supply allocations
• Impact based operational planning
• Dynamic stock level calculations based on risk intelligence
Response
• Event Recognition
• Simulation
• Trace impact of failure
• Example: Event >> Location >> Supplier >> Material >> Product
• Recommendation
• Suggest alternatives to the effected parts, additional inventory coverage, or
alternative suppliers
• Allocate available material optimally to priority orders or high value products
Industry Example
• Toyota RESCUE System
• REinforce Supply Chain Under Emergency
• A centralized database
• Contains mapping of 1000’s of suppliers and its suppliers’ suppliers
• Identifies vulnerabilities and parts info of over 650,000 supplier sites

• Reference: Toyota's 'Quake-Proof' Supply Chain That Never Was (forbes.com)

 Case Study
Supply Risk Management with
Scenario Planning
 Background
a. Company
• Food and Beverage Company in APAC with multi-region sourcing and business operations
• Direct supplier of food products to supermarkets, wholesalers and the food service outlets

b. Challenges Faced Prior to Project

• Supplier allocation plans were done manually using MS Excel before punching in ERP
• Much of the data input and update was done manually and was subject to human errors
• Uncertainty in supply commitments during Covid-19 created a massive impact on delivery
• Planning teams were overwhelmed with frequent changes to plan
• Lack of scenario-based “what-if ” analysis tools made it difficult to gauge impact on delivery
 Solution Implemented
c. Simulation based planning
• Migrated allocation planning out of spreadsheets to planning system

• A model was created in the planning system to cross-reference suppliers and materials

• Anticipated changes in supplier commitments during specific weeks could be tagged in system

• Material shortages in specific weeks could be determined by tool

• Impact of material shortage on Production Plan could be shown by tool

• Planner could play multiple scenarios to pick alternate supply sources and/or change production priorities

• Scenarios could be reviewed by Procurement, Store, Production, and Sales

 Supply Review

System shows the

periods with
material exceptions
(dark red)

Planner tags the

weeks where
committed supply is
not available
 Production Review

System shows the impact of material

shortage on production targets for
corresponding weeks

Planner alters
Finished Good
priorities to re-
allocate constrained
materials to key FGs.
 Outcome
d. Result and the Value Added

• Clearer impact analysis of supply risks improved collaborative decisions

• Realistic reallocations keeping in mind supplier risk factors

• Better all round preparedness and alignment between Sales and Operations
 Who we are
ABOUT US
Founded in 2015, a boutique
consulting firm with exclusive focus
on EPM solutions.
GLOBAL OFFICES
Offices in India, Singapore, The
Netherlands and Canada.
Global delivery center at Hyderabad.
RESOURCES
45+ Best in Class Finance & Supply
Chain resources geographically
distributed. Collective experience of
350+ years
PATNERSHIPS
Gold Partner of Jedox and a
preferred S&OP consulting partner
globally
Experienced in other EPM tools
such as Anaplan, Pigment, Board
etc.
CUSTOMERS
25+ existing customers in USA,
Netherlands & APAC
Reach across industries such as
Healthcare, Hi-Tech, Consumer
Goods, Chemicals, Biotech, Food &
Beverage, Cosmetics &
Manufacturing
DOMAIN EXPERTISE
Experts in implementing Financial
Planning, Sales Performance, S&OP,
Supply Chain Planning solutions.
Contact Us
Keansa Solutions Pte. Ltd.
68, Circular Road
# 02-01, 049422
Singapore

Srabani Bandyopadhyay
Phone Number: +6593893821

E-Mail: info@keansa.com
Srabani.Bandyopadhyay@keansa.com

https://keansa.sg/

https://www.linkedin.com/company/keansa-solutions-singapore/mycompany/