Fortune 500 companies are doing business with a surprisingly small number of common suppliers, according to CVM Solutions, a provider of supplier management solutions. CVM warned of the potential risks to the supply chain should any of these suppliers be adversely affected by the economic downturn.
CVM recently completed a detailed cross-industry analysis using it Master Supplier Database, which includes hundreds of data points per supplier, including customer/supplier spend levels. The company says the database and subsequent cross-industry analysis enabled CVM to track and monitor supplier trends and risks that could affect a supplier's ability, or inability, to support customers. CVM identified a core set of 10,500 suppliers that are recipients of 80 percent of Fortune 500 spending. In addition, only 110,000 suppliers make up 95 percent of the total spend. CVM was also able to identify a relatively small set of suppliers with significant spend, 16,060, that are common among the Fortune 500. Based on this analysis by CVM, it appears that years of strategic sourcing and supplier consolidation has created a "dangerously small group" of suppliers that receive most of the Fortune 500 companies spend.
Source: CVM Solutions