How OEMs Can Compress Their Cash-Conversion Cycle
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For any procurement department worth its salt, finding the right suppliers goes well beyond the question of pricing and quantity and enters into looking at how the selection of one supplier over another changes the organization’s risk profile. The Resilinc R Score is working to help streamline the process of making those determinations. The ranking methodology highlights organizations that are leading the charge in managing risk and bringing their supply chain organization to the highest levels of resiliency. Particularly in the high-tech space, with its inherent volatility and global reach, resiliency is a key component of success.
“The R Score can enable a company to enhance its sourcing process (by having a greater understanding of a potential supplier’s resiliency),” Resilinc said. “It also provides a capability to communicate internally to leadership regarding the current status of their overall program and areas for further improvement … The R Score provides a measurable framework to benchmark with competitors and industry peers, and over time show progress on improving their program.”
Although the R Score efforts reach across a variety of verticals, high-tech companies are robustly represented. In fact, Resilinc has calculated an R Score for over 3,000 companies in the high-tech industry supply chain. Half of those organizations are tier 1 suppliers, while the remainder are tier 2, the company reported. Visibility into that second tier is incredibly important since an event in the second tier may not get reported to those further down the supply chain that might be negatively impacted, Bindya Vakil, CEO and founder of Resilinc told EBN.
The high-tech industry is leading the way in terms of resilience, with average scores that outperform life sciences and automotive industry averages, Vakil said. “They are a lot more resilient,” she added. “If you are resilient and in high tech, you are better than some of the more traditional verticals in terms of awareness and investment in business continuity.”
The high-tech industry has learned its risk lessons the hard way in many cases. Earthquakes and hurricanes have made headlines for their impact on the electronics supply chain many times in the past decade or more. “The manufacturing process in high tech is dependent on wafer fabrication sites, which is a complex environment with very little room for making mistakes,” said Vakil. “It’s dependent on China. Some products are not easily dual-sourced and there’s a high dependency in intellectual property (IP).”
In this context, building strong relationships with suppliers and demanding good visibility is critical to success. Further, it behooves these OEMs to help their critical supplier be more resilient and reliable whenever possible.
Resilinc, which provides a risk management service, developed its R Score to help organizations monitor and measure the resiliency of its partners. This comprehensive assessment of a company’s supply chain resiliency evaluates, benchmarks, and ranks companies on a number of key metrics, including transparency, network resiliency, continuity robustness, performance and the mature of the company’s supply chain resiliency program. The company recomputes the scores quarterly, giving each a score between 1 to 10, with a higher score indicating a stronger resiliency profile.
Click on the image below to start a slideshow on EPSNews’ sister site EBN to run through Resilinc’s top picks for resiliency leaders in the high-tech sector.
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