Sector: Supply Chain

Opportunity: Predicting supplier bankruptcy filing in advance to avoid massive disruptions in fortune 500 companies. Fortune 500 supply chains depend on an increasing number of critical suppliers. These suppliers are extremely specialized. Consequently, the impact of disruptions to these suppliers can be severe. Procurement teams need to constantly monitor the health of their supply bases.ORI saw the opportunity to accurately predict the likelihood of a supplier filing for bankruptcy within 90 days as a valuable tool to help Fortune 500 companies.

Approach:Our Data Scientist was a member of ORI’s scientific team that developed a predictive bankruptcy risk score, called the Supplier Stability Indicator (SSI). The SSI used Machine Learning tools to predict suppliers’ likelihood of bankruptcy within 90 days, by monitoring changes in performance and credit. The SSI is more accurate than any other available approach in the market.

Results:The model fundamentally changed the way enterprises were able to predict suppliers’ risk. SSI’s superior performance led to the rapid growth of OpenRatings, which was eventually acquired by D&B. This model is now offered as part of D&B’s Supplier Risk solution, with over $100 million recurring annual revenue and several Fortune 500 customers.