Supplier Cost Risk Analysis

What Is It?

Supplier Cost Risk Analysis evaluates the potential financial risks associated with suppliers, including cost variability, delivery delays, and quality issues. By integrating IoT-enabled monitoring, real-time data from supply chain platforms, and advanced analytics, manufacturers can proactively identify and mitigate risks. Unlike traditional supplier assessments, this approach leverages dynamic data to provide actionable insights into cost drivers and supply chain vulnerabilities. By integrating supplier cost risk analysis with MES, ERP, and supply chain management systems, manufacturers can enhance decision-making, reduce operational disruptions, and improve cost efficiency. One of the pillars of TPM (Total Productive Maintenance) is to have the operator take as much ownership of maintaining the machine as possible. It's sort of like doing your own basic maintenance on your car - it will be more efficient and probably done with more care and attention since you own the car. But a lot of people don't change their own oil (or even wiper fluid). Other than being too busy, the biggest hurdles are some combination of: not knowing how, not having the equipment, or not having the consumable (oil, fluids, etc.). It's the same thing for operators and their machines. They are measured on production, so they don't have the time. The equipment and consumables aren't at the machine. They don't have the instructions of what should be done when. They're unsure when to perform the tasks. With Industry 4.0, many of these issues can be addressed. The system will know how many pieces have been made since the previous activities, so the operator doesn't have to track that. The system can provide a list at any time of what activities have to be performed - and step by step instructions on how to do it. Video Overview Tags Categories By Department Maintenance Production By Process Maintenance Preventive Maintenance By Technology Machine Monitoring OEE Solutions IoT Solutions Outcomes Optimized Autonomous Maintenance activity Clear record of tasks performed Reduced machine downtime events Industries Food & Beverage Durable CPG Automotive Industrial etc. Industry Type Discrete Continuous Process Batch Process Hybrid Food & Beverage is typically batch process up front, with discrete packaging back end Other industries are similar blends of process & discrete, such as Pharmaceutical, Specialty Chemical, etc. Complexity Simple Complex Status Submitted User-Created "Official" Competitive Advantage Dimension Cost advantage Ability to produce goods at a lower cost compared to competitors, giving a competitive price advantage. Reliability Ability to consistently produce goods when promised, giving a competitive advantage on delivery Quality advantage Ability to produce goods with higher quality compared to competitors, resulting in increased customer satisfaction and loyalty. Speed to market Ability to bring new products to market faster than competitors, allowing a first-mover advantage. Flexibility Ability to quickly adapt to changes in market demand and shifts in customer preferences. Differentiation Ability to offer unique products or services that are not available from competitors, resulting in a competitive advantage. Strong customer relationships Good relationships with customers can help companies maintain a competitive advantage by retaining customers and attracting new ones. Efficient supply chain An efficient supply chain can help companies reduce costs, improve product quality, and respond quickly to changes in demand. Intellectual property Patents, trademarks, and other forms of intellectual property can give companies a competitive advantage by protecting their products and ideas. Workforce Development Effective training and workforce development programs, superior recruitment and retention of employees Sustainability Minimize impact on carbon footprint, reduce energy consumption, reduce overall waste produced Free Form User can add any relevant tag Editors / Admins can remove these if not appropriate Preventive maintenance tasks often get created when there is an unplanned breakdown on a machine. These PM tasks get documented and followed up on without anyone knowing whether that task is helping to prevent the failure, what is the optimal interval for the task, or if more should be done. Machine monitoring solutions capture the data necessary to capture a before and after picture for when the PM task is implemented, experiment with the PM interval to see the impact on failure rate, and identify whether to continue the task and how often it should be performed. Video Overview 1-5 minutes Professional Tags Categories By Department Maintenance Production By Process Maintenance Preventive Maintenance By Technology Machine Monitoring OEE Solutions IoT Solutions Outcomes Optimized PM activity Reduced machine downtime events Industries Food & Beverage Durable CPG Automotive Industrial etc. Industry Type Discrete Continuous Process Batch Process Hybrid Food & Beverage is typically batch process up front, with discrete packaging back end Other industries are similar blends of process & discrete, such as Pharmaceutical, Specialty Chemical, etc. Complexity Simple Complex Status Submitted User-Created "Official" Competitive Advantage Dimension Cost advantage Ability to produce goods at a lower cost compared to competitors, giving a competitive price advantage. Reliability Ability to consistently produce goods when promised, giving a competitive advantage on delivery Quality advantage Ability to produce goods with higher quality compared to competitors, resulting in increased customer satisfaction and loyalty. Speed to market Ability to bring new products to market faster than competitors, allowing a first-mover advantage. Flexibility Ability to quickly adapt to changes in market demand and shifts in customer preferences. Differentiation Ability to offer unique products or services that are not available from competitors, resulting in a competitive advantage. Strong customer relationships Good relationships with customers can help companies maintain a competitive advantage by retaining customers and attracting new ones. Efficient supply chain An efficient supply chain can help companies reduce costs, improve product quality, and respond quickly to changes in demand. Intellectual property Patents, trademarks, and other forms of intellectual property can give companies a competitive advantage by protecting their products and ideas. Workforce Development Effective training and workforce development programs, superior recruitment and retention of employees Sustainability Minimize impact on carbon footprint, reduce energy consumption, reduce overall waste produced Free Form User can add any relevant tag Editors / Admins can remove these if not appropriate

Why Is It Important?

Supplier Cost Risk Analysis is critical for reducing financial risks, improving supply chain resilience, and enhancing operational efficiency. Key benefits include: Proactive Risk Mitigation: Identifies high-risk suppliers and cost drivers before they impact operations. Improved Cost Control: Provides visibility into cost variability to support better financial planning. Enhanced Supplier Relationships: Strengthens collaboration with reliable suppliers through performance-based insights. Operational Continuity: Reduces disruptions by aligning production plans with supplier reliability. Strategic Decision-Making: Supports diversification and long-term sourcing strategies based on dynamic data. Functional Impacts Improved throughput Improved on-time performance Improved Schedule Adherence Reduced Maintenance hours Financial Impacts Reduced Maintenance expense Reduced Maintenance overtime improved Throughput Additional non-quantified benefits (Pain) To the individual Easier job without unplanned downtime events Increased ownership of the process To the community / society to the business Eventually - this will be a set of Weighted Links to Causal Analysis What measures are impacted This impacts KPI that use those measures Changes in those KPI also have a financial impact Use Case History Who Created? Tim Stuart Who Contributed? Tim Stuart Sree Hameed Who Sponsors? Visual Decisions Why is it difficult today? Machine Manpower Lack of knowledge of how to perform tasks May not want additional responsibility Material Measurement No record of when last AM tasks were performed No counter of time/pieces since last AM task Management Lack of emphasis Not empowering workers Worker measurements need to account for time spent on AM Method Lack of defined process Lack of prompts Environment (Mother Nature) Technical challenges Lack of Data Functional Impacts Improved throughput Improved on-time performance Improved Schedule Adherence Reduced Maintenance hours Financial Impacts Reduced Maintenance expense Reduced Maintenance overtime improved Throughput Additional non-quantified benefits (Pain) To the individual Easier job without unplanned downtime events To the community / society to the business Eventually - this will be a set of Weighted Links to Causal Analysis What measures are impacted This impacts KPI that use those measures Changes in those KPI also have a financial impact Use Case History Who Created? Tim Stuart Who Contributed? Tim Stuart Sree Hameed Who Sponsors? Visual Decisions Why is it difficult today? Machine Manpower Lack of understanding how to perform analysis Material Measurement Management Lack of emphasis Method Lack of defined process Environment (Mother Nature) Technical challenges Lack of Data

Who Is Involved?

Which Business Functions Care?