Supplier pool ''dangerously small''

10 May 2009

11 May 2009 | Martha McKenzie-Minifie

Years of strategic sourcing and supplier consolidation has created a "dangerously small" group of suppliers that get the bulk of US Fortune 500 companies' spend, new research claims.

A core of 10,500 suppliers were recipients of 80 per cent of the $75 billion (£49.6 billion) spend, according to a study of 89 Fortune 500 companies by business intelligence firm CVM Solutions. It identified 4,484 "common" suppliers, with whom at least two of the surveyed companies spent a minimum of $100,000 (£66,082).

The report found the number of common suppliers was "surprisingly small" and warned of potential risks to the supply chain should those vendors be badly hit by the economic downturn.

The figures were unveiled at the four-day Institute for Supply Management conference, which ran until last Wednesday in the US.

"We believe these findings should signal a strong warning to large enterprises that the current economic storm is posing great harm to their supply chain by concentrating the risk across fewer and fewer suppliers," said Rajesh Voddiraju, chief executive of CVM Solutions.

SMmay2009

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