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Stories about the inability to know or predict that a supplier is failing until the trucks don't show up at the back dock are not uncommon. "This is such a dilemma because companies have strategic and nonstrategic suppliers, and are traditionally focused on their strategic and preferred suppliers. The problem is suppliers that don't seem critical turn out to be very critical during a specific point in the production process," says Mickey North Rizza, research director for AMR Research. "As these suppliers begin to fail, there's a realization that without them it could affect the ability to meet demand or even shut down the organization's ability to deliver, resulting in little or no revenues."
Consequently, there's been a steady stream of inquiries from organizations asking how to establish a supplier risk system.
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