Vendor Rating: the importance of a supplier portfolio
How to analyze your suppliers through Vendor Rating
When you have a business, it is fundamental to understand the risks involved in the relationship with customers and suppliers. When we speak of suppliers, one has to do with responsibility for the quality of the services and products offered by the company. If a supplier delays delivery or gets into financial difficulties - so that it can't produce or acquire raw materials - the customer who turns to that supplier sees these issues reflected in his own operational risk.
It, therefore, becomes fundamental, first of all, not to rely on a single supplier but also to carry out an analysis based on economic and financial stability, management, or the presence of negativity.
Supplier-related risks: what to analyze
To understand supplier-related risks, we first have to start with the degree of dependence that the supplier has on our company: if, for example, a supplier invoice of €100,000 and €80,000 derives from a single customer, this means that the supplier 'depends' on that customer for 80% of its turnover. This factor indicates a potential lack of stability because if the company does not buy for a certain period, the supplier will risk going into crisis due to a lack of revenue.
In addition, a client needs to consider whether it is a direct or indirect material supply or a key material for the chain's production, so how risky a delay on the part of the supplier can be if there is a failure to deliver the product on time.
The Vendor Rating on Tigran
Once we are aware of the risks associated with a company's suppliers, we come to the concept of the Vendor Rating: This is a supplier portfolio that a client can build through the analysis of the main factors affecting the health of a company, such as the balance sheet data, the level of risk management, the company's negatives (including those related to shareholders), and the level of dependence on the customer.
modefinance's Fintech Team implemented a vendor rating project for the Tigran Risk Platform. In this case, customers provide Tigran with information about the vendors on which they wish to perform the analysis through a system of interfaces. Then it becomes possible to automate the analysis process from that same documentation. Tigran will provide the MORE Score calculated based on the latest financial statements, the company's master data, and the sector trend, namely information regarding a company's position in its reference sector.
The analysts of the Rating Team will then have the task of concluding the analysis by confirming or modifying the Score assigned based on the data provided. Through this analysis, it will then be possible for the client to know which suppliers are best suited to its needs and maintain a vendor portfolio that is as accurate as possible to limit the company's operational risk.
Supplier Portfolio on s-peek
On s-peek, it is possible to create a supplier portfolio from companies' public balance sheet data throughout Europe. The MORE methodology allows s-peek to process companies' public data to check their solvency and financial equilibrium.
FLASH reports and Extended12M reports will provide detailed information on a company's profitability, liquidity, and solvency, but also about MORE Credit Limit (the degree of maximum exposure recommended to it) and a comparison with other companies in the sector, all based on the balance sheets of the last three years. Based on this data, therefore, the company in question will obtain a MORE Score that will allow each customer to check whether the supplier in question is suitable for his needs.
S-peek allows you to check the companies in your portfolio at any time.
Please also note that when you register, you will be entitled to 3 free credits to download up to 3 FLASH reports!
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