Executive Briefings

'Darwinian Effect' Thought to Be Why Number of Suppliers Declining Worldwide

Probably nobody knows exactly how many suppliers make up the global supply chain, but a recent estimate says there are nearly 5 million unique suppliers in use by Fortune 1000 companies. Based on its multi-year analysis of suppliers to the Fortune 1000, CVM Solutions says that roughly 310,000 (6 percent) suppliers were used by two or more companies in 2009. And that number is down 15 percent from 366,000 in 2008.

"The overall number of relevant and highly used suppliers is significantly smaller than many believed," says Mike Anguiano, chairman of CVM Solutions, a provider of supplier management solutions. "We also noticed that, despite the disappearance of certain suppliers, a new crop of suppliers were being added. This trend leads us to believe that there is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers and replace them with stronger ones."

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Probably nobody knows exactly how many suppliers make up the global supply chain, but a recent estimate says there are nearly 5 million unique suppliers in use by Fortune 1000 companies. Based on its multi-year analysis of suppliers to the Fortune 1000, CVM Solutions says that roughly 310,000 (6 percent) suppliers were used by two or more companies in 2009. And that number is down 15 percent from 366,000 in 2008.

"The overall number of relevant and highly used suppliers is significantly smaller than many believed," says Mike Anguiano, chairman of CVM Solutions, a provider of supplier management solutions. "We also noticed that, despite the disappearance of certain suppliers, a new crop of suppliers were being added. This trend leads us to believe that there is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers and replace them with stronger ones."

Read Full Article