| Abstract: |
Small and medium-sized enterprises (SMEs) play a critical role in industrial supply networks, yet their financial distress may cause disruptions that extend far beyond the focal firm. In long-cycle shipbuilding projects, financially vulnerable suppliers can contribute to delivery delays, re-sourcing needs, material-management inefficiencies, and reduced network resilience. This study develops and compares four predictive models for SME financial distress prediction - Logistic Regression (LR), Random Forest (RF), Extreme Gradient Boosting (XGBoost), and a Deep Neural Network (DNN) - using the Polish Companies Bankruptcy dataset. To improve robustness, the modelling pipeline applies median imputation, outlier treatment using the 3×IQR rule, z-score normalization, class weighting, and SMOTE. XGBoost achieved the strongest overall predictive performance on unseen data. To address the black-box problem and improve practical usability, SHAP-based explainable AI (XAI) was applied to interpret the best-performing model at both global and local levels. The results show that profitability, liquidity, and cost-efficiency indicators are the most influential drivers of financial distress, with operating-profit coverage of financial expenses emerging as the strongest predictor in this dataset. Beyond model comparison, the paper positions explainable financial prediction as a transparent decision-support component for supplier-risk management in shipbuilding networks. SHAP-based explanations make it possible to identify whether elevated supplier risk is primarily associated with weak liquidity, insufficient operating-profit coverage, or cost pressure, thereby supporting more transparent supplier selection, ongoing monitoring, and resilience-oriented risk management. The study contributes to XAI research by demonstrating how explainable financial models can be connected to broader sustainability and operational decision-support contexts. |