I was very sad to see the announcement a little over a week ago that Purchasing Magazine was ceasing publication. Sad, but not surprised.

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If you know anything about business, you know that print journalism is dying. Most newspapers haven’t made money in years. More and more people simply go to the Web for their news and entertainment.

Most print publications have been trying to reinvent themselves online in the hopes of establishing a profitable business model. Purchasing Magazine had been trying to do this, too. But completing that transformation apparently didn’t happen soon enough for Purchasing Magazine’s parent company.

Evaluating Purchasing Magazine’s demise made me realize that there are at least two different ways that companies (i.e., suppliers) approach their last days. The first way is when they desperately scale back operations and lay off employees.

This method is sometimes successful, but often results in a severe degradation of service, bad publicity, and customer loss which leads to bankruptcy. Earlier this year, I blogged about the warning signs that precede supplier bankruptcy.

Purchasing Magazine’s demise was quite the opposite. They had really beefed up their online journalism, featuring lots of “Web only” content. They had launched, then subsequently improved, their PurchasingBIZconnect social network. They had retained all of their highly talented editors. They introduced a number of bloggers. There was no external sign of to-the-bone cost cutting.

But, still, they were owned by a large parent company that could simply decide to cut its losses and make the publication extinct. Months earlier, the parent company announced that it was divesting its publications. Several of them, representing approximately two thirds of total publication revenues, were sold to buyers who were going to keep those publications rolling. Purchasing wasn’t one of them. Apparently, the publication was too small for the parent to bother with, so it just shut Purchasing down.

Could that happen to any of your suppliers?

You bet it could.

There are some key things to watch about your suppliers and their stability. Sure, performance can be an indicator of bad things to come. But it isn’t the only indicator.

You need to evaluate the industry. Is the writing on the wall for the industry? Print publications, 35mm film, and traditional professional associations are but a few of the many industries that are steadily fading. If you are using a supplier in an eroding industry, you need to be concerned.

You also need to be aware of the ownership structure of your suppliers. Are they owned by a parent company? If so, are they a big, important part of the parent company’s portfolio or just a small, expendable component like Purchasing Magazine was?

You can capture this information in an RFP and should update it annually for all suppliers. While you don’t have to like a supplier closing its doors, it should never be a total surprise to you.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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