When It Rains, It Pours On Some Suppliers

I read an article entitled "Pentagon honoring contracts with BP" in today's Pittsburgh Post-Gazette and it got me thinking.

BP, of course, has become a target of anger of many US citizens due to the massive oil spill that continues to plague the Gulf Coast. Politicians are taking note of citizen sentiment and, apparently, looking to maximize the number of ways to punish BP for the oil spill accident.

One of the US' options for punishing BP is to stop the government procurement of fuel and services from the company. Of course, that is a delicate balance: the government negotiated a settlement with BP where BP would make massive reimbursements to those impacted by the oil spill. If BP's sales get hurt by being barred from US government contracts, will they lose the ability to make restitution to the American people victimized by the accident?

There is a similar backlash going on in the private sector as well. Some Americans are refusing to purchase their fuel from BP stations.

Now imagine this situation: you are doing business with a supplier. And that supplier is a good supplier for you. But one isolated incident does tremendous harm to the reputation of that supplier. And many of its customers start canceling their orders and contracts with that supplier, making it financially feeble.

What do you do? Do you stick with that supplier? Or do you need to protect yourself from the risk of that supplier becoming insolvent?

One bad event can sometimes bring a supplier down. Would you be willing and prepared to drop a good supplier if it "poured" on that supplier?

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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