Supply-chain stress test
Flow's Scenarios, Remove counterparties: take customers, markets or suppliers out and see the company's own revenue and margins for its latest fiscal year, under the reader's assumptions.
The scenario lists the company's customers (with the share of revenue a document gives), its markets (the countries and regions its annual report tags revenue to) and its suppliers (with what each supplies). Taking one out works through the company's own reported year: the revenue that goes with it, then gross profit, gross margin, operating income and operating margin. Every figure after a removal is Estimated, and the row beside each removal shows its arithmetic. It is what the arithmetic gives if the assumptions held, not a forecast.
Formula
A customer or market: lost revenue = its share of revenue × share that stops × weeks ÷ 52 A customer named without a share, while that assumption is on: an even part of the revenue the stated shares leave, at most 10%, Estimated A supplier: share of output stopped = the share of the input it is stated to supply; or all of it from a stated sole source or the only source identified; or an even part of the identified sources × share that stops × weeks ÷ 52 Together: customers add up; a stopped input takes its part of what is left Gross profit after = gross profit − lost revenue + the variable part of cost of revenue on it Operating income after = operating income − the gross profit lost
Inputs
- For. How long it lasts, 1–52 weeks of the fiscal year.
- Share that stops. How much of the removed party's buying or supplying stops, 10–100%.
- Fixed share of cost of revenue. The part of cost of revenue that does not fall with revenue, 0–80%. At 0% the gross margin holds and only the operating margin moves.
- Other identified sources step in. A supplier with another identified source of the same input stops nothing.
- Customers named without a share. On by default: each counts at an even part of the unstated remainder, at most 10% (a US report must state a customer at 10% or more). Off, such a customer is listed and not counted.
How to read it
The totals are the company's own, as its latest annual report tags them. "Who else they reach" lists the other companies in the network the removed parties supply or buy from.
Limitations
Inventory, contract terms, input prices and how fast an alternative could be qualified are not disclosed. Operating expenses are held where they are. Which of a company's products need which input is in no document, so a supplier's part is read off the input, not off the products.
In Kereon
Flow · Scenarios. Recomputed on the server each time the list or an assumption changes.
Also called: supply chain stress test, supply-chain stress test, stress test, effects, take out, remove a customer, remove a supplier, revenue at stake.