In many cases, businesses choose to mitigate these risks by diversifying their suppliers. For example, a car manufacturer may contract two separate suppliers to deliver the same component.
The potential for a supplier to run out of supply.
Supplier Exit Risk
The risk that a supplier will go out of business or discontinue a business, product or service.
Supply Chain Risk
The risk of supply chain disruptions between you and the supplier.
Quality failures on the part of the supplier.
Low supplier performance.
Political instability that disrupts supply.
The risk of new laws and regulations that disrupt the use of the supplier.
The risk that a supplier will do something unethical that becomes your extended responsibility.
The potential for a supplier to damage your reputation.
Compliance issues related to a supplier.
Cybersecurity incidents related to a supplier.
Becoming overdependent on a supplier.
Intellectual Property Risk
Loss of intellectual property to a supplier.
The potential for a supplier to compete with you or help your competitors using their knowledge of your operations.
The potential for a supplier to increase their prices.
Barriers to Exit
The risk that you will find it difficult to discontinue use of a supplier even when you face problems with their performance.
The risk that the supplier will not meet their contractual obligations.
|Overview: Supplier Risk|
The potential for losses due to failures of a supplier.
A supplier of a specialized and difficult to source part goes bankrupt.A new supplier delivers products late disrupting your supply chain and operations.A supplier has quality issues that result in quality failures of your products.