2Sustain

Yesterday, Panjiva released new data illustrating that U.S. buyers are exposing themselves to significant risk by doing business with troubled manufacturers overseas. While others in the blogosphere are describing these new numbers with words like “alarming” and “stunning,” I don't feel that I can do the same. After all, I'm not shocked by the results. If you combine complex global supply chains with a worldwide economic crisis, what’s the one thing you can, and should, expect? Risk.

Sure, Panjiva’s new analysis gives us some insight into the scary depths of the problem, but the take-home message is one I’ve explored many times (see posts here and here, e.g.): now, more than ever before, you need to manage your global supplier risk so that you can effectively adapt to today’s rapidly shifting business environment.

Panjiva produces a Manufacturer Watch List, which helps U.S. buyers manage global supply chain risks by distinguishing between “risky” and “healthy” suppliers of goods and materials. To make the Watch List  a manufacturer must have suffered a 50% decline in volume shipped to U.S. customers during the most recent three month period, versus the same period a year ago. Here are the new numbers announced yesterday, as pulled from Panjiva’s blog:

• 28% of significant manufacturers (those sending 10 or more shipments to U.S. buyers in the last year) are on Panjiva’s Watch List.

• 38% of significant buyers received a shipment from a Watch List manufacturer within the last three months.

• 47% of significant buyers received a shipment from a Watch List manufacturer within the last six months.

• 74 of the largest 100 buyers received a shipment from a Watch List manufacturer within the last three months.

• 83 of the largest 100 buyers received a shipment from a Watch List manufacturer within the last six months.

"These numbers reveal that a startlingly high number of U.S. companies are doing business with troubled manufacturers,” says Panjiva CEO Josh Green. “Unfortunately, many of these buyers may not even be aware of the risk they're facing. As the economy worsens, it's essential that U.S. companies move quickly to identify which of their suppliers are at risk, and which are healthy, so as to avoid supply chain disruptions."

Want to hear more from Josh Green? Check out Jason Busch’s post at SpendMatters from earlier today. He talked to Josh and asked for specific recommendations regarding how buyers should respond to Panjiva's ugly, but not altogether surprising, new data.