How do you calculate a supplier risk score?

Multiply the severity, occurrence, and detection scores together. With severity 6, occurrence 4, and detection 3, the Risk Priority Number is 6 x 4 x 3 = 72 on a raw scale, which this tool normalizes to a comparable 4.55 for ranking across suppliers.

What is a good supplier risk score?

Lower is better. On a 1-10 per-dimension scale, raw RPNs above roughly 100 usually demand mitigation, 40-100 warrant monitoring, and below 40 are typically acceptable. Always escalate any part with a severity of 9-10 regardless of total.

What do severity, occurrence, and detection mean for a component supplier?

Severity is how damaging a failure would be — a bricked secure element is worse than a scuffed bezel. Occurrence is how often the supplier is likely to ship the defect. Detection is how likely your incoming inspection catches it before it hits the line.

Supplier risk RPN vs a simple defect rate — which should I use?

Defect rate tells you how often something is wrong; RPN weights that by how bad and how detectable it is. A rare defect that is catastrophic and invisible to inspection outranks a frequent but cosmetic and obvious one, which a raw defect rate would miss.

How do I lower a supplier's risk score?

Attack the dimension you can move fastest. You usually cannot reduce severity, but tighter process controls cut occurrence and added incoming tests or supplier data cut detection. Dropping detection from 3 to 1 here would take the raw RPN from 72 to 24.

Why use the same scoring scale across all suppliers?

RPN is only meaningful for ranking when every supplier is scored on the identical 1-10 rubric. Mixing scales makes a 4.55 from one part uncomparable to another, defeating the purpose of prioritization.

Payment Terminal & Retail Hardware calculator

Supplier Risk Calculator

Supplier Risk is an FMEA-style Risk Priority Number that ranks how dangerous a given component supplier or part is to your payment terminal build. You score three dimensions — how bad a failure would be, how often it is likely to happen, and how likely it is to slip past incoming inspection — and multiply them into a single prioritization number. Sourcing engineers, supplier quality teams, and NPI leads at terminal and retail-hardware OEMs use it to decide which suppliers get audits, dual-sourcing, or tightened inbound gates. For payment hardware, where a bad secure-element or card-reader supplier can trigger a certification failure or a field recall, ranking suppliers by risk is what keeps a launch on schedule.

What this calculator does

Estimate supplier risk for payment terminal and retail hardware using production-ready inputs so teams can rank risks and decide which issue needs containment, controls, or escalation first.
Use it when supplier risk in payment terminal and retail hardware needs a defensible ranking against other payment terminal and retail hardware risks for the next review.
It multiplies severity, occurrence, and detection scores into a single supplier Risk Priority Number for ranking and triage.

Formula used

Supplier risk score = supplier risk severity score × supplier risk occurrence score × supplier risk detection score
Use the same scoring scale across comparable supplier risk risks.

Inputs explained

Defect severity if supplier issue reaches the line:
Likelihood of the supplier issue occurring:
Chance the supplier issue escapes incoming detection:

How to use the result

Use it during supplier qualification, PPAP review, or a sourcing risk workshop to decide where to spend audit and mitigation effort.
RPN is a relative ranking, not an absolute probability; two very different score combinations can produce the same number, so always review the severity dimension on its own for safety-critical parts.

Current U.S. benchmarks

Global copper trades at $13,484 per tonne (IMF via FRED, May 2026), up 41.5% in a year, and U.S. industrial electricity averages 8.66 cents per kWh. Both feed electrified-hardware unit economics.
Steel mill PPI stands at 348.53 (BLS, May 2026), up 6.7% from a year earlier. New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate a supplier risk score? Multiply the severity, occurrence, and detection scores together. With severity 6, occurrence 4, and detection 3, the Risk Priority Number is 6 x 4 x 3 = 72 on a raw scale, which this tool normalizes to a comparable 4.55 for ranking across suppliers.
What is a good supplier risk score? Lower is better. On a 1-10 per-dimension scale, raw RPNs above roughly 100 usually demand mitigation, 40-100 warrant monitoring, and below 40 are typically acceptable. Always escalate any part with a severity of 9-10 regardless of total.
What do severity, occurrence, and detection mean for a component supplier? Severity is how damaging a failure would be — a bricked secure element is worse than a scuffed bezel. Occurrence is how often the supplier is likely to ship the defect. Detection is how likely your incoming inspection catches it before it hits the line.
Supplier risk RPN vs a simple defect rate — which should I use? Defect rate tells you how often something is wrong; RPN weights that by how bad and how detectable it is. A rare defect that is catastrophic and invisible to inspection outranks a frequent but cosmetic and obvious one, which a raw defect rate would miss.
How do I lower a supplier's risk score? Attack the dimension you can move fastest. You usually cannot reduce severity, but tighter process controls cut occurrence and added incoming tests or supplier data cut detection. Dropping detection from 3 to 1 here would take the raw RPN from 72 to 24.

Last reviewed 2026-05-12.