Managing risks with major suppliers

Large suppliers have advantages but also represent significant procurement risks. Solving problems with an important supplier can be difficult: so,

Finding an available contact person to urgently solve your problem before those of other customers is sometimes very complicated or even impossible... Sooner or later the question of the “small customer” that you may be with your supplier will arise. Unfortunately, you often discover this after you have already engaged with the supplier in question.

But you can predict the likelihood of such problems. For a strategic purchase or a major project, there are some steps you can take before taking any risks by engaging with a large supplier:

• Require a single contact: when requesting a proposal, always require suppliers to designate a contact person who will be responsible for managing situations requiring strong interaction (in addition to everyday relationships)

• Ask your single contact: The aptitude of single contact can reduce or increase procurement risk. Before engaging with a supplier, you will need to assess the designated person's communication skills, knowledge of various aspects of their business, and relationships with key contacts in each area. If the person seems to be unqualified in these various fields, supply risk is increased.
• Ask for a “climbing plan”: As good as your single contact is, some purchases are simply too risky or too critical to expect a response from them. Ask the vendor to attach to his proposal an “escalation plan” with the names and contact details of the persons to contact in case of no response from the single contact within a set timeframe. This plan should therefore start with the name of your contact and end with that of the manager with an appropriate number of intermediate levels in between.
• Test the “climbing plan”: Before engaging with this provider, test the plan by trying to reach the right people. Are they answering the phone? If not, leave a voice message telling them to call you back in a short time. If they do not contact you again, again the supply risk is increased.

Although every procurement project involves risks, going through these different phases can help you assess the risks associated with selecting a large supplier, and thus guide you through this extremely important step.

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