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February 09, 2012

 

Friday Rant: When it Comes to Researching Vendor Viability, Pick Up the Phone

One of my most informative research past times as a writer and consultant in this space is to trade thoughts with other analysts and advisers about the state of vendors in the market. Much of this chatter is less gossip and more information exchange. However, one aspect of the gossipy side which quite often ends up being useful to all parties is when we trade thoughts on vendors that we think might be in trouble or that we're not seeing in current deal activities.

There's a few on our list right now. But you often won't see me -- or anyone else -- writing about them unless their demise (or sale) is imminent. It's just not good form. Nor is it fair, considering that individuals only see a sub-section of the overall market and in writing, it's difficult to provide a complete picture. However, we will talk about them in advisory situations (even if it's an informal phone call).

So when it comes to really learning what is on the mind of industry analysts and advisers when it comes to vendor viability -- especially if you are worried about a current vendor that you're working with or are considering a solution from a smaller provider -- by all means pick up the phone and call them. I know for a fact that they/we will tell you things over the phone lines that won't make it into a research note, blog post or even an email.

- Jason Busch


Commodity Edge Conference

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Robert Rady-Pentek's Gravatar Another great way is to actually look into the supplier’s financial statements and find out where they stand. Look at important financial ratios like debt/equity, quick ratio and interest coverage. Look also at trends over the past few years.

For public companies you can get their financial data online. Private companies are a little more difficult to get financial information from...your only alternative is to ask. They should comply. After all, if you are going to entrust your supply chain to your supplier, the least they could do is assure you that they are financially viable. In my experience, over 50% of private companies are willing to provide financial information data without issue.

If supply chain professionals do not have the time or skills to complete supplier financial viability assessments they should ask their finance group for assistance or reach out to a third party assessment firm (for example: http://www.exervio.com/index.php?id=116) for support and guidance.

Fact:
Did you know that in 2008, over 43,000 businesses filed for bankruptcy in the USA, that's a 53% increase over 2007. 2009, so far, is looking even worse.
# Posted By Robert Rady-Pentek | 6/4/09 8:31 AM
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