9 Supplier Red Flags You Should Never Ignore

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COVID-19 has prompted procurement professionals to re-evaluate their supplier portfolios, questioning everything from who and where they buy from to which suppliers are driving the most innovation.

In an effort to mitigate risk, some organisations are making buying local a top priority, while others are committed to consolidating their supplier lists or developing a more comprehensive preferred supplier program.

There’s no question that recent months have offered procurement professionals plenty of time for reflection, which extends to making difficult decision about suppliers who are no longer meeting expectations. Now, more than ever, organisations need suppliers who are trustworthy, reliable, and deliver a consistently high standard of service.

Concerned that some of your suppliers are falling a little short of the mark? If any of the following nine, red flags ring true, it might be time to find an alternative.

1. Your supplier doesn’t keep in touch

In today’s world, the most effective buyer-supplier relationships are built on collaboration and communication. If you’re out of touch with a supplier for weeks, or even months, on end, it’s very unlikely that they’ll be able to fully deliver on your needs or work effectively. A supplier who prefers to work independently or takes a long time to respond to your calls and emails should be a major red flag.

2. Your overseas supplier is no longer cost effective

Offshoring has long been considered a cost-effective and efficient way to manage supply chains. But as costs in developing countries to continue to rise and disruptive events around the world threaten global supply chains, the negatives might be starting to outweigh the positives. If your organisation is reliant on a single-source, overseas supplier, the chances are your supply chain has been impacted by trade wars, natural disasters or global pandemics. If so, it might be time to consider the benefits of finding a local supplier.

3. Your supplier is cutting corners on quality

If you’ve observed a steady decline in product or service quality, it’s definitely time to find a new supplier. No organisation wants to work alongside a vendor that pulls out all the stops in the early days of an agreement, only to let standards slip as time goes on.  You need a supplier you can trust to deliver in the long term.

4. Your supplier isn’t driving innovation

Today, organisations expect procurement teams to identify suppliers who can drive creativity and innovation. This is especially true when it comes to factors that impact brand reputation and customer loyalty, such as sustainability. Don’t stick with a supplier that is stuck in the past and struggling to come up with new ideas and approaches

5. Your supplier is unreliable

Every supplier deserves a second chance, but a third or fourth or fifth? Global pandemic aside, there’s no excuse for a supplier who consistently makes mistakes whether it’s delayed shipments or incorrect orders. The cost to your business is simply too high to ignore.

6. Your supplier isn’t transparent

A supplier who is reluctant to share their financial records is perhaps the biggest red flag of all. With the vast majority of supply chains and suppliers disrupted by COVID-19, it’s more important than ever before to be sure your suppliers are financially stable.

7. Your supplier isn’t compliant

Procurement must carry out regular audits of the entire supply chain and set clear regulatory standards by which suppliers are expected to comply.  It’s vital that any failing to do so are held to account.

8. You don’t get along well

This article has addressed the importance of supplier communication, collaboration, and innovation. But procurement can’t hope to achieve these things with a vendor unless the foundation of the relationship is positive. Don’t underestimate the importance of liking a supplier. If you don’t enjoy working together, every step of your relationship from the negotiation process to chasing up product deliveries will be arduous.  

9. Your supplier is overpriced

Every good procurement professional knows that there is more to a good supplier than the cheapest price. But it’s still important to regularly benchmark the costs of the products and services you’re procuring against competitors to rule out major discrepancies.

About Author

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PASA (Procurement and Supply Australasia) is the leading provider of information, education and networking opportunities to procurement professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, training, awards and PASA CONNECT membership network. PASA is a trading name of BTTB Marketing Pty Ltd. BTTB Marketing has operated under the BTTB, CIPSA Conferences and PASA names for over twenty years. https://procurementandsupply.com/

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