Study assesses supplier financial strength and dependency

CAPS Research has released a benchmarking report titled “Assessing Supplier Financial Strength and Dependency” that focuses on the need for companies to spot weaknesses within their supply base and act quickly to avoid disruptions caused by supplier vulnerabilities. The report provides an overview of how organizations assess the risk tolerance of their suppliers by measuring and evaluating the financial health, organizational stability, and customer-dependency. The survey results were almost evenly divided between manufacturing (48 percent) and non-manufacturing (52 percent) organizations.

Most of the survey participants reported they rely primarily on financial statements and available credit scores (95 percent and 91 percent, respectively) to determine their suppliers’ financial health. However, only 44 percent of the survey participants reported they track what portion of their business accounts for their suppliers’ total revenue.

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CAPS Research is a non-profit research organization founded in 1986 to provide leading research to our strategic-minded corporate sponsors and to the public. Its mission is to work in partnership with a global network of executives and academics for the discovery and dissemination of strategic supply management knowledge and best practices. CAPS Research is jointly sponsored by the W.P. Carey School of Business at Arizona State University, the Institute for Supply Management, and Global 1000/Fortune 500-size organizations.