SourceDay launched its Supplier Reliability and Supply Volatility Indexes, two quarterly benchmarking tools designed to help manufacturers and distributors better evaluate and even predict supplier performance and future risk across industries with greater accuracy.
“As the manufacturing industry continues to address the major effects of tariffs, the Supplier Reliability and Supply Volatility Indexes help to identify upstream warning signs 1-2 quarters before they happen, enabling manufacturers and distributors to proactively deploy mitigation tactics, improve supplier engagement, and improve outcomes for their customers,” says Michael Miller, CEO of SourceDay. “The indexes have predictive power and enable both manufacturers and distributors to see what’s around corners, which is invaluable given that volatility levels are increasing dramatically by the day due to demand uncertainty and price risk.”
Key takeaways:
· The Supplier Reliability Index and Supply Volatility Index use SourceDay’s AI-powered proprietary database across the purchase order (PO) lifecycle.
· The Supplier Reliability Index measures the health of supplier relationships across dimensions that matter most to performance and resiliency: responsiveness, on-time delivery (OTD), price and lead time stability, and level of accommodation to buyer requests.
· The Supply Volatility Index assesses operational threats and signs of strain in the national supply chain, such as increased uncertainty in demand, price volatility, shortages, and late orders. These signs of strain are measured by frequency and degree of PO changes, price increases, variance for a given part, manufacturer move ins and move outs, on-time and in-full deliveries, all of which contribute to supply chain volatility.
· In Q1, the Supplier Reliability and Supply Volatility Indexes found:
Supplier reliability has broadly increased (61.9% to 62.7%) over the last two years as investments in supply chain resiliency post-pandemic take hold. This steady increase is driven by increases in supplier responsiveness (+2%) and willingness to accommodate buyer requests (+7%), along with steady improvements in OTD (+2%).
Supply volatility reached the highest level since Q2 2022 at 67.0%, a period marked by material shortages, labor shortages, and unstable demand signals. This level of volatility is a 22% year-over-year increase.
Volatility is driven by sharp increases in demand uncertainty (+6%) and price volatility (+36%) in Q1 as manufacturers prepare for and respond to the threat of tariffs. Many manufacturers moved orders in to build inventory stockpiles at predictable prices, while supplier price changes spiked for the first time since 2022.
Demand uncertainty, as measured by manufacturers changing order due dates, was a leading indicator of poor supply chain performance in 2021, as buyers are often the first to react to changing environments with date “move outs.”
