All Your Purchasing Goes Through One Supplier: What If It Raises Prices, Runs Late or Walks Away

Simplicity has a price

Working with a single supplier is simple: one offer, one contract, one contact person. While everything works, there is no reason to change.

But one morning an email arrives with new prices, or the goods do not show up on Friday, and you have no one else to call. That is when you see you paid for simplicity with your freedom.

What depending on one supplier costs

Dependence is the first problem. When 70% or more of your goods come from one supplier, your negotiating power is probably weak, and the supplier usually knows it.

Next come prices that rise without explanation. With no alternative, every increase sounds like "take it or leave it", and you have no basis for negotiation.

The hardest to manage is the risk of interruption. If the supplier runs into trouble with production, logistics or regulatory licences, you bear the consequences with no control, and you are the one answering to your customers.

How to assess it and bring in a second supplier

Look at the numbers. When one supplier accounts for more than 50% of your procurement, it is time to think about diversification. Above 70% it is a risk to address urgently.

Ask also whether you could replace the supplier for key products within 30 days. If you cannot, your position is weak.

Bring in the second supplier with small quantities, 10-20% of procurement. That does not endanger the relationship with the primary one, and it gives you an alternative. Once you have two offers you can compare them, and your position in negotiations changes.

There is no need to announce it right away. If your contract allows it, develop the alternative quietly until you are ready. First check what the contract says about exclusivity, since that is not something to assume.

Related decision: Your supplier is late, prices keep rising, and you wonder whether it is time to leave.

A second supplier is not betrayal

A second supplier is not a betrayal of the first. The goal is to avoid being caught unprepared, not to end a relationship that works well.

If you are thinking about a second supplier, describe how much you depend on the current one and what a change would mean for purchasing. You will get a report with risks and options.

Level we suggest: Essential (4 AI perspectives, 9 EUR) or Consilium (8 AI perspectives, 19 EUR).