Most organizations depend on others for the supply on their inputs. The actions of these suppliers have impact on the operations of enterprises. Activities in the suppliers’ environment such as breakdown of equipment, industrial action by workers or shutdown of plants may result in the late deliveries of supplies.
For example, considering an enterprise xyz that sells food to customers, a delay or non- supply of inputs such as water, diesel, rice, fish and so on, can result in the delay of preparation of food by xyz. Delays like that may compel xyz to loose some of its customers.
On several occasion, the ability or inability of suppliers to supply on time to supply the needed quantity and quality to grant trade or other credit facilities, can and use these suppliers.
Conventionally, organizations are advised to identify and make use of different suppliers. Hence, this may be difficult where the suppliers is a monopoly or where the nature of the input makes it hard for it to be sourced with relative ease.