Make-Buy, Outsourcing & Network Design worked example

Outsource Quality Risk with defect severity if it reaches the customer of 3 score: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop defect severity if it reaches the customer to 3 score, then walk the calculation through step by step. Estimate outsource quality risk for make-buy, outsourcing and network design using production-ready inputs so teams can rank risks and decide which issue needs containment, controls, or escalation first.

The inputs for this scenario

  • Defect severity if it reaches the customer (1-10): 3 score (the input this scenario stresses; the baseline uses 6)
  • Likelihood the supplier ships the defect (1-10): 4 score (held at the documented default)
  • Difficulty detecting the defect at receiving (1-10): 3 score (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Outsource quality risk score = outsource quality risk severity score × outsource quality risk occurrence score × outsource quality risk detection score.
  • Outsource quality risk score works out to 3.35 score at these inputs, and this is the headline figure for the scenario.
  • Outsource quality risk severity score works out to 3 score at these inputs.
  • Outsource quality risk occurrence score works out to 4 score at these inputs.
  • Outsource quality risk detection score works out to 3 score at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where defect severity if it reaches the customer sits at 6 score and the headline result is 4.55 score, this scenario comes in 26.37% below the baseline at 3.35 score.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to defect severity if it reaches the customer, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. RPN is ordinal, not absolute — an RPN of 72 is not twice as risky as 36, and equal RPNs can hide a critical severity-10 mode, so always inspect the individual scores.

Results at a glance

  • Outsource quality risk score: 3.35 score (headline result)
  • Outsource quality risk severity score: 3 score
  • Outsource quality risk occurrence score: 4 score
  • Outsource quality risk detection score: 3 score

Run it with your numbers

  • To rerun this with your own numbers, open the live Outsource Quality Risk calculator, set defect severity if it reaches the customer to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.