Supplier failure – how much warning do you get (..and what does this mean for the public sector)?

Jason at Spend Matters features (again) the sad demise of Purchasing magazine, which we covered here a while ago.  He links to a good piece by Charles Dominick  which discusses the fact that there was so little warning.  We tend to assume that if we keep an eye on key suppliers, do the D&B ongoing checks on finances, then we will see a potential failure well in advance. But that is not necessarily so.  For instance, a small division or subsidiary of a larger parent company may just find itself surplus to requirements, even if it is financially not a t death's door.  That seems to be the case with Purchasing - a strategic decision by the parent, rather than a financial crisis.

As Charles puts it;

"Apparently, the publication was too small for the parent to bother with, so it just shut Purchasing down.

Could that happen to any of your suppliers?

You bet it could".

That is very hard to mitigate against as the buyer. Keeping close to the parent company and their strategy if you have critical suppliers who are subsidiaries is one route.  But having strong contingency plans  and alternative suppliers, even if your current supplier looks solid, is probably the key step to take.

And (sorry to bring things back to public sector again), I wonder whether any suppliers might decide over the next year or two that the UK public sector just isn't worth the effort?  We will need to be careful that genuinely critical suppliers don't just say, "OK, we're off" if the public sector makes doing business too difficult, or margins truly unattractive.

So we need some smart supplier and market segmentation here from our public procurement masters; which suppliers can be beaten over the head safely; which need more careful handling?

Discuss this:

Your email address will not be published. Required fields are marked *