Monitoring Key Suppliers in Tough Times

[jsinger]

Even if your business is holding up, you can be devastated when major suppliers fail. We're doing more and more monitoring of our suppliers' fiscal health. Running costly D&Bs on the biggest ones. Looking in G News for layoff announcements. Even checking litigation websites.

Just added a new supplier. Its products are pretty ordinary, but it's family owned and has a iron clad balance sheet.

Seeking suppliers with 70 year old owners, not 30-ish wiz kids formerly from the Cash is Trash School of Business.

[LifeinAsia]

Hopefully, the 70-year old owners have competent (and younger) managers who will carry on the business without a hiccup in the same way if/when the owners kick the bucket.

[LizaJane]

I have had one supplier pass away this year. The daughter took up the helm... what a disaster that has been.
Three of my suppliers are almost or over 70. I actually called them and asked what type of plan they had in place .. just in case. They mostly laughed and said they will live forever. Wish that were the case.
In this economy, I expect at least 20% of my suppliers to go out of business.
I'm looking for additional suppliers that have healthy balance sheets AND are young enough to last until I'm ready to sell the business.

[jsinger]

As for geezers, I'm thinking of the still-formidable Maurice Greenberg (age 84) who was ousted as AIG's long time CEO four years ago and before, as he claims, the truly scary stuff started. And of course, Warren Buffett, about age 78.

We've had one minor supplier fail this year. Even if things get no worse, I too expect to lose 20% of our sources... in the next 12 months. I can't imagine anything better.

We have several suppliers who do too much business with leveraged retailers funded by crumbling Private Equity firms. Those PE guys all have huge mansion mortgages, trophy wives and absolutely no allegiance to the long term survival of their investments.

The risk of supplier failure is immediate and could be triggered by distant and convoluted failings that aren't easy to predict.

[Rugles]

That is a concern we have too Jsinger. We have put more inventory into our warehouse than usual to avoid any supply delays we may have and to buy us time if one of our main suppliers fails. We have also added new lines and competing lines in the last 6 months for this very reason.

The last thing we want is to enter our busiest part of the year without being able to fill orders.

[MrHard]

One of our suppliers went under recently. I'm glad they did not take any of our money with them.

The pattern is to have problems and not say anything until the last minute. I guess they hold on as long as possible expecting some sort of miracle to occur.

[mattb]

We are starting to hear from independent reps either they are getting fired from suppliers or not getting paid commissions.

[jsinger]

not getting paid commissions.

Lol! Stiffing the traveling reps is equivalent to a company putting a pistol in its mouth. Means the last cent is gone and every customer and competitor is going to know it in a matter of days.