Supplier trouble: when the handwriting on the wall becomes legible

Supply chain risk is a major concern. An increasing array of new software solutions and offerings from consulting firms continue to become available to address supplier and supply chain risks. The large number of tweets on Twitter about supply chain risk on a daily basis point to a widespread, global problem weighing on many firms’ minds — and bottom lines. From the vantage point of my involvement on ISM’s Supply Chain Risk Management Group’s Board, I have seen the interest in this topic mushroom. We have gone from a Risk Track at the ISM (Institute for Supply Management) International Conference, now in its third year, to organizing a full-blown conference on supply chain risk (Buying the Umbrella Before It Rains on July 26-27 in Chicago).

But what if you are just starting out in this area and are not yet up to speed on the tools and techniques for management supply chain risk and do not yet have a risk process or risk organization in your company? Where can you begin? You might watch for any of these potential signs that one of your suppliers may be struggling:

  • There is evidence of high employee turnover or especially senior leadership turnover
  • Quality and/or delivery performance have been declining
  • Management is uncooperative about addressing problems that are impacting the customer
  • Requests for cash payments or picking up a check
  • Complaints of non-payment from sub-tier suppliers
  • Poorly maintained facility and equipment

Supplier performance is a leading indicator for risk. Developing closer relationships with key suppliers and understanding their performance are good ways to spot and avoid supplier problems before they adversely impact a customer’s business.

Sherry R. Gordon

Author of:
Book: Supplier Evaluation and Performance Excellence: A Guide to Meaningful Metrics and Successful Results
CloudDVD: Supplier Evaluation and Performance Management



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