Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I’ll be reviewing a whitepaper entitled “Preventing Supply Disruption:
Supplier Viability and the Threat to Your Business” from Crowe Horwath and Industry Week.
For reasons that I cannot yet reveal, I was particularly excited to review this whitepaper. I thought that perhaps there would be magical things that could be learned about how a procurement professional can assess supplier viability and mitigate the risks of doing business with a financially distressed supplier.
Do you think that I found the “magic?”
I’ll save that conclusion for the end. First, I’ll go into the review.
The whitepaper started out by really hitting some key points about the importance of supplier viability. It did a nice job of dichotomizing traditional supplier management strategies against supplier viability assessments, characterizing the former as activities done after-the-fact and the latter as “forward-looking.” I agree.
The whitepaper also touched on the personal aspects of managing a supply base. That is rarely done and was a nice touch. Specifically, it pointed out that top management can be unforgiving when an organization faces a major problem that arose from your realm of responsibility and that the “inevitable question is, ‘Why didn’t you do something about it?’…Being caught in a situation where the organization is surprised can be career damaging to the one overseeing the
Again, very welcome points. But, after getting through about six pages that pounded and pounded and pounded the fact that supplier viability is a big problem, I began to get suspicious that this was going to be more of a salesy whitepaper than an educational one.
Was I right?
Well, the seventh page gave me a bit of hope in the way that it described the characteristics of any solution that will be successful at mitigating the risk of supplier solvency problems. Those characteristics indicated that such a solution:
- “Must rely on the most current data in order to assess potential supplier risk”
- “Must assure participating suppliers of the confidentiality of their raw data, while still enabling their customers to accurately assess their financial, strategic, and operational position”
- “Must employ a highly visible and intuitive interface that enables customers to recognize supplier risk immediately, while also suggesting possible mitigation strategies”
- “Must enable sophisticated and in-depth analysis of supplier financial and operational health, drawing on proven and experienced analysts with significant relevant experience in the applicable industry”
- “Must provide early and accurate identification of supplier vulnerability, and must also offer tools that enable identification and tracking of effective solutions to address the company’s and their suppliers’ problems”
While the first two bulletpoints were encouraging and applicable to a procurement department that wanted to handle supplier financial analysis itself, the remaining bullets made it clear that the sales pitch wasn’t far behind. And it wasn’t.
The last half of the whitepaper talked about the methodology that Crowe Horwath uses to assess supplier financial risk for its clients. While salesy stuff in whitepapers is usually a turnoff for me, I was actually surprised and impressed that Crowe Horwath gave away so much detail about how it conducts its services. The “salesy” segments as I’ve called them actually provide some good insight into how to assess and mitigate supplier financial risk.
So, I wouldn’t recommend letting the salesy stuff dissuade you from downloading the whitepaper. There was no “magic” – you won’t even learn how to calculate a supplier’s current ratio or anything like that – but you may get some ideas regarding how to structure a supplier financial assessment process. You can download the whitepaper from Industry Week’s Web site (registration required).
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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