“A supply chain is only as strong as its weakest link,” states one Procurement pro — and that weak link keeps getting more frail.

In a January 2009 poll done by Ernst & Young, 67% of the companies that responded said they’d take a hard hit if one of their three stop suppliers failed.

The risk is the greatest it’s been in decades.

One undermining factor: The companies that the suppliers rely upon. No matter how well stocked you might be today, it’s nearly impossible to prepare for how to handle your supplier’s supplier going under.

In order to get the best possible picture of the risks your suppliers are facing, experts rec0mmend:

• due diligence and predictive modeling of your most-critical suppliers
• building a safety net for critical suppliers who run into rough spots, and
• offer expert advise and guidance as to what alternatives might exist for troubled survivors.

Of course, it’s always best to be proactive when dealing with your suppliers, especially if there’s a whiff of trouble.

That’s why it’s best to open a two-way channel of communication, which is used regularly.

It’s important to stay in touch with suppliers at all times. If you wait until there are obvious signs of trouble, it just might be too late.

Tags: bankruptcy, supplier, supply risk