For a long time procurement was judged mainly on price. That has changed. Economic uncertainty, geopolitical disruption and increasingly complex multi-tier supply networks have pushed supplier risk up the agenda, to the point where many procurement leaders now give it a priority comparable to savings.
In industrial supply bases, the useful news is that risk and cost tend to live in the same places, and the same expertise uncovers both.
Where risk hides in an industrial supply base
- Concentration. A single forging or casting source for a family of parts, often chosen years ago for reasons that no longer apply.
- The sub-tier. A machining supplier that depends on one heat treater, or a harness maker with a single connector source. The risk sits one level below the supplier you manage.
- Capacity. Headroom assumed from a supplier’s brochure rather than verified against your volumes on the shop floor.
- Tooling. Tools that belong to you on paper but cannot easily be moved, because documentation, ownership or condition were never checked.
- Commercial health. A supplier losing money on your parts, which a should-cost model will often reveal before a missed delivery does.
Put a real price on resilience
Resilience is not free, and pretending otherwise undermines it. A second source adds tooling, qualification effort and sometimes a higher unit price. The right question is a total-cost-of-ownership question: what does the second source cost, and what does the disruption it prevents cost? Answered with real numbers, it is often an easier decision than it looks.
The specialist who can tell you what a forging should cost can usually also tell you whether its supplier can keep making it.
That is why we treat supplier risk and cost as one piece of work rather than two. The people who understand how a part is made are best placed to judge both what it should cost and how safely it is being supplied.