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Predictive Value

A different perspective on supply chains

Snarled shipping and material shortages are on the front pages of the financial press these days. Also, investors are interested in the total carbon content of a product, which needs to take into account scope 3 greenhouse gas emissions.
Here’s one more thing to keep you up at night: Disruption risk at your suppliers. We’ve found a high correlation between excessive waste water discharges reported by the Environmental Production Agency and accidents as reported by the Occupational Safety and Health Administration. The more often facilities exceed the limits set by the EPA, the more likely they will have accidents.
In the two charts below we highlight two suppliers in the automobile manufacturing supply chain. Both are outside the cluster of peers in the scatter plots of waste discharges. As the data points move into the upper right hand corner, accident risk increases. Both of these companies are privately held, so they are under less scrutiny than the publicly-held firms.

Derived from monthly EPA wastewater discharge filings
Derived from monthly EPA wastewater discharge filings