What To Do When Faced With A 'Warning Alert' In Your Supply Chain

BearingPoint. Institute Will your suppliers turn from strategic to catastrophic? What to do when faced with a 'warning alert’ in your supply chain Companies with a large share of the value chain outsourced are now facing one critical question: should they abandon less competitive suppliers to search for new, lower-cost alternatives, or should they support and sophisticate the existing suppliers? ALERT Your supplier is facing challenges to keep up with the strategies and targets of your business and customers Ок Early warning characteristics Based on the type of challenge they are facing, suppliers that are candidates for turnaround can be categorised as matching one or more of these four different perspectives *DASHBOARD OVERVIEW (Y-0-Y) Perspective Trend Current Diff. (%) Perspective Trend Current Diff. (%) NOPAT (%) 2.6% -62.9% Salary inflation 3.3% 58.8% Revenue CAGR 14.0% 833.3% Delivery accuracy 82.0% -13.7% -900.0% Payment terms change request Complaints of sub-suppliers 100.0% 4.0 # Liquidity NOPAT, given CAGR and new payment terms, indicates liquidity challenge Profitability Already too-low profitability, given growth rate and salary inflation both add to Debt ratio Growth Low profitability, rapid growth and liquidity challenge indicate need to investigate overall debt ratio Delivery accuracy and sub-supplier complaints indicate difficulty in handling growth rate cost increase The fork in the road Companies have the choice to either abandon these suppliers for alternatives or support and sophisticate them Abandon Support Develop alternatives for a fresh start with new supplier Invest time and effort to develop supplier and deepen relationship * Dashboard overview is for illustrative purpose only BEIO04-ST-IN-2