What Do You Know About Your Suppliers?

How stable will your suppliers be in the next year? Without a database committed to aggregating and displaying a supplier's financials, you may never know. Let's dream-up what that database might look like. A database including a comprehensive review of supplier financials, relationships, and more. Maybe our dreams can come true...

Are Your Suppliers Financially Secure?

Sourcing your parts from financially secure suppliers is one step toward creating a more stable supply chain.

The case can be made for looking at a supplier's financial security with the following example:

Say you are looking for a part from a company with billion-dollar revenues. That company appears to be financially secure, right? But what if one customer made up 80% of that supplier's revenue? If that customer pulls out of their deal, then the supplier will find itself in a financial disaster that can affect the availability of your parts.

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To add to that, if an industry-wide part shortage occurs, where do you think your supplier will dedicate its remaining inventory of the scarce part? To the company making up 80% of its revenue, or to you?

Without a dedicated database with supplier financials, it would be extremely difficult to find the level of detail regarding a supplier's financial information that is critical to operating a more stable and reliable supply chain for electronics.

Do You Know Where Your Suppliers Are?

Tracking the locations of your suppliers and their manufacturing and distribution centers can feel like a game of Where's Waldo. Wouldn't it be nice to have a dedicated supplier database that tracked, say, the locations of a supplier's:

• Fabrication
• Assembly
• Test
• System Assembly
• Warehouse
• Distribution Center

Maybe all of this information finds itself tidily displayed on a map, as well. Where your company can easily view the locations and assess a supplier's potential risk for disruptive events such as tariffs, extreme weather, or other geopolitical risks.

But is all of that possible?

Ditch the Supplier Audits/Surveys

Many companies do an onboarding survey of potential suppliers to assess their stability. Yet a one-time, onboarding survey with no legal obligation doesn't fit the mold for the future.

Supplier data and information is in a state of constant flux. The only way to stay informed about your suppliers is to ensure you're using a dedicated database that constantly updates its data and insights for electronic parts suppliers.

In addition to detailed financial records, this comprehensive database should include data about a supplier's patent filings, litigation histories, management changes, and more.

Instead of asking your supplier to tell you about their own risks, you should use the dedicated database to see an overall risk score for each of your suppliers through an unbiased data source.

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Maybe said database would have something like a Supplier Scorecard, which is created after analyzing factors such as financials, growth, supply chain, transparency, product data, and more.

Each factor adds up to a score ranging from 0 to 100. The higher the score, the more stable the supplier. Here are the scoring benchmarks for suppliers:

• 71-100: Supplier is stable
• 41-70: Supplier is medium-risk
• 40 and below: Supplier is high-risk

And maybe that same database would have an automated alert system that notifies your company about any important happenings with your supplier. Perhaps a new merger has occurred, or maybe a new patent has been filed? Your company could be one of the first to know if it was using this database.

But that might all be too good to be true.

…unless?