Blogs

1. Forecast Demand: Sum the total future demand quantity due in future months 3-18 for all products or components supplied by the supplier. The Expected load is the total forecast due/18 (Period reviewed)
2. Historical Shipments: Sum the total quantity shipped in the last 6 months for all products or components supplied by the supplier. The Average Capacity is the Total parts shipped/6 (Period reviewed)
3. Rough measure capacity risk score: The supplier score is determined by Expected load / Average Capacity:
<=100% = low risk – Forecast demand quantity is smaller than the historical shipment quantity and no capacity risk is associated with the supplier.
100% to 120% = medium risk - Forecast demand quantity is slightly higher than the historical shipment quantity and no major capacity risk is associated with the supplier.
120%+ = High risk - Forecast demand quantity is higher than the historical shipment quantity and high risk is associated with the supplier capacity and the capability to ship on time. In such a case, some immediate steps need to be taken with the supplier:

1. Collect Data such as production capacity to Obtain data on the supplier's maximum production output and current utilization to better understand how much of their current capacity is already being used to fulfill other orders.
2. Evaluate Infrastructure and Resources like Facilities and Equipment, Labor Force Inspect and supply chain to review the supplier’s own supply chain for raw materials and components.
3. Assess Financial Health to determine if a supplier can support investment in additional resources.
4. Review Performance History
5. Conduct recurring On-Site Visits to monitor progress or new bottlenecks

In conclusion, by monitoring the supplier rough capacity score, organizations can identify suppliers that may be struggling to meet their commitments. This early warning system allows companies to diversify their supplier base or develop contingency plans to mitigate the risk of supply chain disruptions.