Everyone knows to look for red flags that foreshadow the end for important customers. New research suggests the same should be done for key suppliers.
According to Ernst & Young, over two-thirds (67%) of execs said they’d suffer if one of their top three suppliers went under.
What’s worse, by the time most firms catch wind of any trouble with their top suppliers, it’s already too late.
In the past, you’d get six months – sometimes even 12 – from the time a business started showing red flags or dangers ’til the time the business actually failed.
Given the current economic climate, that time frame has been reduced to weeks or, in worst cases, days.
Best bet: Frequently check on key suppliers — the same way you check on key customers — by looking at their most current financial info.
While this may be a little extreme, Ernst & Young believes businesses should have audit authority over key suppliers’ books.
