The obvious & lesser-known key risk indicators for vendor management (part 4)

Your supplier’s business continuity is your business continuity

Insolvencies rate by industry. Source: ASIC
  • A key vendor goes under > project plan is halted > its partners unable to meet deadlines, violating contractual agreements with other enterprises
  • A raw material supplier is affected by natural disaster > shortages across the board > project delays > increased total costs
  • An investigation on a subcontractor is launched > public pressure to distance from the party in question > dragged timeline to find replacement
  • A few key project stakeholders suddenly resign > gap of knowledge > project delay, potentially lower quality if no equivalent replacement is found
  • Contractual dispute > stakeholders claiming different versions of the truth > paperwork recovery process still taking place after a recent relocation and restructuring of multiple branches > missed deadline > loss of customer trust
Source: The Business Continuity Institute

Is there such a thing as over-dependence on vendors?

  • Consolidation of your supplier base can result in power being shifted to the select few — who may exploit their positions and increase prices
  • There is a point of diminishing returns from economies of scale
  • Possibility of sub-optimal service delivery due to bundled services not being core capabilities of the supplier. Or they outsource those services which has a degree of risk
  • Locking out innovators and more agile or local suppliers who can deliver stronger value in the long run
  • Business continuity issues if something drastic happens to the key supplier(s)
  • Not having a diverse pool of suppliers may affect the ability to compete for work from government agencies, who have sustainability quotas — or even the organisation’s ability to meet its own sustainability goals
  • For government bodies, favouring single suppliers may contravene the Competition and Consumer Act 2010

Vendor risk management in construction




Enterprise marketplace platform that connects orgs & their supply chains.

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Enterprise marketplace platform that connects orgs & their supply chains.

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