Sometimes suppliers run into rough times, even when they are performing adequately for you.
So what do you do?
Stick with the supplier you like? Or read the tea leaves and find a new supplier before things get bad?
These types of questions were running through my mind when I read the article “Is Your Force Majeure Clause Too Weak?”
Vonage, as I understand it, is not yet profitable. And with the inability to sign up new customers in the near term, their future looks very bleak.
So what are their customers to do?
Should they hope that things will get worked out and everything will be fine? Or should they find a new supplier sooner rather than later to avoid the risk to their continuity of supply?
Enough of their current customers will likely take the second option that it makes the first option even less attractive.
The financially struggling supplier scenario frequently occurs in purchasing with all types of suppliers. You have to watch the news. While you have to avoid any knee-jerk reactions, you also have to seriously consider what your contingency plan is, what will trigger you to execute it, and when.
Recommended Reading
- Improving Quality in the Supply Chain
- Procurement Strategy Development
- Executing a Global Sourcing Strategy
- Tactical vs. Strategic Procurement Splits
- Procurement in 2025: Five Megatrends and Their Implications
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