A company’s FRISK? score tracks their probability of bankruptcy within the next 12 months and compares it to the rest of their industry. Top scores indicating great financial health are “10” and “9,” neutral scores range from “8” to “6”, and then scores descend into what is the “red zone” of public company bankruptcy risk between “5” and “1.” Once the red zone is reached, it is time to heavily scrutinize that company in your portfolio.?
Blue Apron currently has a FRISK? score of “5.” While this is in the red zone, it is an improvement over the score of “2” they held until November of last year. This piece of information alone does not justify dropping a supplier, but it should certainly lead to an increased level of monitoring and pre-qualification of alternate suppliers within the industry.
Every company is a single link in their supply chain, interfacing with customers as well as suppliers. Whether your supplier is paying their suppliers on time has a material impact on their ability to continue delivering on their commitments?to you. The Days-Beyond-Terms (DBT) index tracks the on-time,?or late,?payment?performance of a company. Keep in mind that this particular index can be deceiving for public companies due to the relative ease with which they can access cash to continue making supplier payments, even if it increases their debt. For the majority of the last two years, Blue Apron has had a DBT Index of “9” or “8,” squarely in safe territory. They have dipped to a “7” (21-30 days beyond terms) three times in the last six months, most recently in January of 2018. Procurement professionals are commonly looking for opportunities to gain visibility into the second tier of the supply chain – and validating that a supplier’s suppliers are being paid on time provides concrete evidence that?procurement professionals can take into consideration and follow up on.
If the best advice regarding supplier financials is to dig into the details and understand their bankruptcy risk, the second-best advice is to open a dialogue with suppliers about that risk. Procurement professionals should start by informing 博艺伟themselves博艺伟 and then ask supply partners detailed questions about signs of risk in their financials. This provides procurement professionals with the best ability to mitigate the probability of disruption and reinforces collaborative relationships with current suppliers.