A supplier can be defined as a person or organization that provides a product or service to a vendor. Most all organizations use suppliers to provide goods and/or services to them. Though most do it, it must be done with caution, as there is a plethora of potential risks involved with using a third-party supplier. Following are five of the most common supplier risks.
1. Financial
There is a great deal of financial supplier risks involved with using a third-party supplier. If your supplier is overseas, then you might concern yourself with fluctuating foreign exchange rates. Regardless of where your supplier is located, you should be mindful of potential bankruptcies, tax changes, market changes and price changes. Of course, there is always the risk of financial loss if a supplier does not meet expectations.
2. Delivery
Sometimes things happen that can prevent a supplier from delivering a good or product. Delivery supplier risks include natural disasters, government or economic issues and terrorist attacks, just to name a few. Unfortunately, these risks can’t be predicted or avoided, but it is wise to be prepared in case they do occur.
3. Compliance
When choosing which company to supply your goods or products, it is very imperative to ensure that they are compliant with any standards and regulations that they or you must comply with. Otherwise, you could face the consequences of heavy fines and a bad reputation.
4. Image
Using a third-party supplier is a big risk to your image. It is important to make sure that the suppliers company morals align with yours. Unethical behavior, such as insufficient working conditions, an underage workforce, fraudulent or immoral business decisions, irresponsible or unprofessional behavior, etc. could destroy your business’ reputation and image.
5. Quality and Performance
Are you getting the quality you paid for and is your supplier performing at the highest level? Quality and performance supplier risks can involve a supplier over promising and under delivering, violating the contract or service level agreement and getting what you paid for (substituting a cheaper option versus a more experience option).
Once you have weighed all your options, considered the risk possibilities above and carefully chosen a supplier, you will need to have a sturdy platform in place that will help you maintain your suppliers and continuously assess and manage your risk. Consider our dynamic platform, SecureWatch. SecureWatch can help improve awareness of risk and its potential impact upon the business.
