How to spot troubled suppliers

IT Buyers must look out for early warning signs if they are to mitigate the risk of suppliers going out of business. There are usually a number of tell-tale signs, both financial and operational, that indicate when a supplier is struggling. Typical signs include a breakdown in cmmunication, falling share prices and senior managers leaving. As a buyer, you need to keep information about all your key suppliers up to date. If a business critical supplier gets into trouble, you need to have a contingency plan in place to minimise the affect on your own business if they suddenly go bust. Look out for operational indicators such as when a supplier stops communicating or refuses to acknowledge support issues or concerns. Financial indicators of trouble can include a dramatic or prolonged drop in share price and even whether they are they paying their employees or contractors on time. With the current economic climate, managing supplier risk is perhaps more important now than ever. If the supply chain fails, then your organisation will be at risk too. Silver Bullet Associates, along with all the main IT Analyst organisations such as Gartner, Forrester and Pricewaterhousecoopers, recommend you keep your key supplier data up-to-date, monitor regularly for any unusual financial or operational activity, and communicate regularly with your suppliers to ascertain their financial health.

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