Head of Finance Solutions
Supplier risk management is the practice of identifying and reducing the ways a vendor could hurt your business — through stockouts, quality problems, payment disputes, or collapse. It means tracking risk per supplier and having a plan before, not after, something goes wrong.
Suppliers can fail you in predictable ways: delivery delays that cause stockouts, quality problems that reach customers, price instability, payment disputes from unclear terms, and the supplier itself going out of business.
You can't remove these risks, but you can measure and manage them.
Score each critical supplier on probability (how likely is a failure) and impact (how much would it hurt). Suppliers with high impact and high probability get action first: a backup vendor, higher safety stock, or a review.
Track on-time delivery rate, rejects, and price movement per vendor so the score uses data, not memory.
If one vendor supplies more than 30-40% of a critical product, qualify at least one alternative. A vendor doesn't have to get the orders to be useful — being qualified and ready is what saves you in a crisis.
For your largest vendors, watch for warning signs: slow responses, payment demands you haven't agreed, staff turnover, or delivery slippage. A structured supplier record makes these signals visible before they become emergencies.
Supplier risk is the chance that a vendor causes harm — through delays, quality problems, price changes, or collapse.
Delivery, quality, price, concentration, and financial (insolvency) risk.
Score probability and impact per critical supplier, using data on on-time delivery, rejects, price movement, and spend concentration.
Relying too heavily on a single vendor. If one supplier covers 30-40%+ of a critical product, qualify an alternative.
Central vendor records and order history make delivery, price, and concentration risks visible and measurable.
