Supply chain risk can come from any source. From the financial failure of a critical supplier to disruptions caused by natural disasters, poor supplier product quality to infrastructure failures. Now is not the time to relax a company’s vigilance over its suppliers. There’s no telling where the next issue can spring from, and adding to the complexity is the difficulty in measuring and monitoring those risks.
Forrester’s Stephanie Moore worries that “a single outage or bankruptcy or fraud or bad acquisition could spell disaster for a client”, she writes in her blog how companies can monitor the viability of privately held IT services suppliers and recommends alternative options are available in case of failure.
Her tips for monitoring the viability of privately held IT services suppliers include:
• Make sure you’re taking the risk for a reason. If the service supplied is that critical, you may want to rethink who your supplier is.
• Have your accountants perform their own financial audits to ensure the veracity of vendor provided financials.
• Check out the ownership structure and debt-holders. Where is the company incorporated? Is it incorporated? Who owns the company and where is the company registered?
• Check out LexisNexis for evidence of legal problems or lawsuits. Corporate counsel can and should assist with this activity and information can be updated in your supplier management system on a regular basis.
• Watch for excessive account management attrition. If your onsite account managers, client partners, or sales folks are turning over too much, this suggests that the company is a risky place even from an employee perspective. And, red flags should be vigorously waving if account management and sales staff are actually being laid off. In this healthy market, stable vendors are adding to their client partner and account management ranks, not firing them.
• Monitor employment websites to find evidence of attrition outside of your account. Interview former employees or current employees who are on the job market.
• Use your social media connections. Facebook, LinkedIn, and many others contain information that is useful for evaluating specific vendor viability.
While there is no silver bullet, Stephanie recommends looking into tools to help executives optimise their monitoring and risk mitigation efforts.