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Fred Hubacker: Thoughts on New Analytical Software Tool – Crain’s Detroit Business

Crain’s Detroit Business article features Fred Hubacker’s thoughts on Southfield-based Alderney Advisors LLC’s new software tool, which identifies financially distressed auto suppliers.

Southfield-based Alderney Advisors LLC today launched an analytical software tool designed to assess the financial health of auto suppliers in a manufacturer’s supply chain.

The tool, called the Alderney Scorecard, is designed to increase transparency through a manufacturer’s supply chain to identify financially distressed suppliers, said Alicia Masse, managing director and co-founder of the consulting firm.

Flagging these suppliers early gives the manufacturer a heads-up that the supplier may become troublesome in the future. The product is meant as a more affordable way for manufacturers to assess looming problems quickly.

Masse and her partners created the part-survey, part-financial modeling tool at the request of a local automotive supplier client. Masse declined to identify the client, citing a nondisclosure agreement.

A team from Alderney retrieves financial information — including profitability, liquidity and liability — and runs that information through a proprietary algorithm to assign a financial health score to each supplier. The scores range from “healthy” to “health in jeopardy” to “very distressed.”

Alderney created the algorithm internally, based on data sets from previous clients.

“What this tool does is help customers mitigate risk,” said Masse, a former managing director at BBK Ltd. and North American finance operations manager for Ford Motor Credit Co. “With the tool, they can get with their buyers and prepare contingency plans.”

The firm expects significant revenue growth from the product by customers looking to assess their supply chains and suppliers in the chain performing internal audits with the tool, Masse said.

Alderney is marketing the scorecard to middle-market manufacturers with revenue below $2 billion, she said.

Short Hills, N.J.-based Dun & Bradstreet Inc. and New York City-based McKinsey & Co. operate similar measurement products but are too expensive for many manufacturers, Masse said. Alderney charges a base rate of $200 for each supplier evaluated as part of the custom scorecard, Masse said.

Supplier-tracking software is the latest trend in the industry’s quest for efficiency, response time and risk mitigation. Other local examples:

  • The Southfield-based Automotive Industry Action Group launched a Web-based database last year for identifying the physical movement of finished goods, parts and materials through the automotive supply chain.
  • Auburn Hills-based BorgWarner Inc. last year launched proprietary software to track orders, deliveries and cancellations from its supply base to find efficiencies.

The Birmingham-based advisory firm Conway Mackenzie Inc. also performs financial health reviews of the supply base but does not use a specific scorecard software tool, Executive Director Fred Hubacker said. 

Determining the pitfalls of the supply base is critical as local manufacturing is growing, he said. 

“Certainly, the financial health of any enterprise is one of the critical elements in terms of understanding how much business you can afford to do with that supplier,” Hubacker said. “You don’t want to overtax them or undervalue their ability to perform to produce the products you need.”