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How Do You Assess Supplier Risk?
In a recent article published in the July 2009 issue of Inside Supply Management entitled “Watch Points on Supplier Health,” a recommendation was made that supply management professionals rely on leading indicators such as the Altman-Z Score to avoid supplier financial meltdown or to mitigate its effects. The Altman-Z score is a quantitative balance sheet method designed to determine a company's financial health and likelihood of bankruptcy.
What methods, financial tools and/or measurements does your company use to assess suppliers’ financial risk?
What actions are taken, if any, when a supplier is found to be at risk?
In a recent article published in the July 2009 issue of Inside Supply Management entitled “Watch Points on Supplier Health,” a recommendation was made that supply management professionals rely on leading indicators such as the Altman-Z Score to avoid supplier financial meltdown or to mitigate its effects. The Altman-Z score is a quantitative balance sheet method designed to determine a company's financial health and likelihood of bankruptcy.
What methods, financial tools and/or measurements does your company use to assess suppliers’ financial risk?
What actions are taken, if any, when a supplier is found to be at risk?