Supply chain

Also called Procurement, Lead time, Supplier management

Everyone you depend on to deliver what you sell, and how long each of them takes.

What it means

Your supply chain is the network of suppliers, manufacturers, distributors and services you rely on. Lead time is how long between ordering and receiving.

It includes services as much as goods: your software, your subcontractors, your payment processor.

Why it matters

Every dependency is a risk you have accepted, whether or not you have identified it. A single supplier with no alternative is a single point of failure for the whole business.

Lead times also drive working capital: longer lead times mean more stock and more cash tied up.

What it looks like in practice

List your dependencies and mark the ones with no realistic alternative. That list is usually shorter and more alarming than expected.

Qualify a second source for anything critical before you need it. Doing it under pressure is how you accept bad terms.

Know your suppliers' payment terms as precisely as your customers'. The gap between them is your funding requirement.

What to watch out for

Concentration on the customer side too. A supplier who depends on you for most of their revenue is fragile, and their failure becomes your problem.

Sub-tier risk. Your supplier's supplier can stop you just as effectively.

Modern slavery reporting duties apply above a turnover threshold, and larger customers increasingly ask about your supply chain regardless of whether you are caught by them.

Where to get proper advice

Your trade association usually knows the sector's supply risks. For contracts, a commercial solicitor on termination and continuity clauses.