Supplier failure is not new to the supply chain; it has just become more critical in the global market. Research has shown that 70% of organizations have had between 1-5 critical suppliers fail. When these failures occur, organizations must find replacement suppliers which can take months to onboard. While the organization is replacing the supplier, they can be experiencing stockouts, shortages, production stoppage, and financial losses.

What causes supplier failure?

There are many reasons for supplier failure, but in most cases, data is a major factor. Many organizations have little to no visibility into their sub-tier suppliers and no single trusted view of their supplier risk. Many organizations rely on manual processes with a heavy reliance on spreadsheets. Data doesn't necessarily cause supplier failure; it can determine how early and accurately the risk can be detected.

Without good data, companies often discover supplier failure after it affects their processes. With timely, accurate data, they can potentially move from:

Supplier fails → disruption occurs → company reacts to Data signals deterioration → risk identified → corrective action → alternative supplier/mitigation → disruption avoided

The biggest problem is bad data creates false confidence. This is often more dangerous than simply having no data. If the customer knows a supplier is high-risk, it can take action—find a second source, increase inventory, or negotiate additional capacity. But if the supplier's data indicates everything is fine when it isn't, the customer doesn't know that action is needed. So, you can think of the relationship this way: Bad supplier data doesn't just create bad information, it creates bad decisions. Those decisions can lead to stockouts, production shutdowns, quality failures, excess inventory, higher costs, customer dissatisfaction, and ultimately lost revenue.

If an organization is relying on supplier data to build an AI model to predict supplier failure, the quality of data becomes even more critical. Supplier portals can play an important role to ensure that an organization can receive timely and accurate data from their suppliers. Plus, a portal can onboard a supplier faster, especially if they are sub-tier suppliers.

For more information or to set up a time to discuss how Innovate can reduce your risk of supplier failure call us today at 412-681-7090 x207 or email Innovate E-Commerceinfo@innovateec.com