The potential risks of new suppliers

Growth and expansion to new markets put pressure not only to the internal resources of the company but also on the supply chain that needs to keep up with the increase in demand. Both have to develop at the same time.  Key issues to focus on are supplier capacity, finding, qualifying and developing new suppliers to ensure uniform quality and preventing risky suppliers from entering your network.

Mid-to-long term capacity forecasts are hard to obtain. However, you need to know how many of your suppliers can expand their capacity, by how much and how fast, so that you can map potential future bottlenecks. If you expand geographically, it is also worth reporting which of your suppliers have operations in the target countries or are willing to follow in your footsteps.

New suppliers are a potential risk source and can cost you expensively if not assessed properly.
How many of them were evaluated in-depth (i.e. quality, financial status, procurement, innovation, etc.) during selection (and on-barding)? How many have been rejected due to inadequate processes? If too few or none, your selection standards may be too weak. How suppliers were actively developed in the last 6 months? How many tasks were assigned and implemented and how many are still outstanding?

If you do not monitor the above, you run a risk that your supply chain will not be able to catch-up with the high growth of your organization, leading to capacity bottlenecks, delays and quality issues.

Possibly, firefighting will eat up the expected profits from the expansion.

 
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