I think companies ought to focus on the former. I'd argue a mix of both probably makes the most sense for most metal-buying organizations. Consider a few of the following points:
- Which of key suppliers (and therefore customer accounts) are most at risk?
- What types of risk are we tracking for our suppliers?
- What is the probability of a financial failure on their part, and how does this affect our supply chain?
- If disruptions occur, what are the proposed contingency plans?
- How quickly can these plans be put in place?
Rather than choosing one side of the debate, start with this question—which of our key suppliers are most at risk? For key metals categories, map out on a 2×2 matrix supply risk on the X axis and degree of impact on the company (in dollar terms) if that supply source went out of business (or some other supply disruption). Any category in your upper-right hand quadrant deserves the consideration of a detailed contingency plan.
Not to lose the message on the balance of the three quadrants, having a supply risk monitoring program for the remaining categories and suppliers makes sense. Creating a strategy and process combined with a technology to constantly monitor supply risk can form the basis of a strong supply risk management program.