Why Traditional Supplier Surveying Is No Longer Enough

It’s time to rethink supplier surveys for supplier risk assessments. While they’ve long been a go-to method for measuring supply chain risk, today’s global landscape makes them less effective for companies that want to manage risk well. But developing a new strategy around supplier surveys doesn't necessarily mean throwing them out entirely—it’s about executing them in ways that make more sense in today's ever-evolving risk terrain.  

Relying on a single, initial vetting of suppliers is no longer enough to navigate today’s complex supply chains. While a one-time vetting process may have been enough to jump-start production in the past, today’s supply chain challenges present new risks that demand an unparalleled level of visibility into a company’s suppliers. These emerging challenges include sudden shifts in financial fundamentals, regulatory changes, environmental threats, and technology advancements.

Suppliers that seem secure and stable today can quickly face unforeseen risks, jeopardizing their reliability. To build resilient supplier relationships and safeguard supply chains, companies must move beyond static risk assessments and adopt a more dynamic approach.

Below, we delve into why traditional supplier risk assessments fall short and explore five key reasons why continuous monitoring and updated surveys are becoming essential for companies striving to stay ahead.

The Problem with a One-Time Screening Program for Suppliers

Screening companies once during setup is a common method for conducting supplier surveys and supplier risk assessments, typically used to add new suppliers to a company’s Approved Manufacturing List (AML) or Approved Vendor List (AVL).

This one-time process often involves collecting financial statements, tax information, industry certifications, and other key details to evaluate whether a business relationship is worth pursuing. While these initial screenings are usually thorough, they rarely remain as rigorous during follow-up assessments. Time and labor constraints often shift the focus of subsequent evaluations toward supplier performance, leaving gaps in understanding the ongoing health and stability of a supplier’s business.

These blind spots can leave companies vulnerable to evolving risks that may only become apparent when they disrupt operations. While local suppliers may be easier to monitor periodically, distant or international suppliers present a much greater challenge for regular, effective monitoring and reassessment.

1. They Don’t Provide Real-Time Insight Into Unforeseen Events

One key reason to incorporate continuous surveying into your supplier risk assessment process after the initial setup is to detect unforeseen events that can impact the supplier, their supply chain, and ultimately the finished product. Even when thorough supplier assessments are administered during onboarding, negative events that impact supplier quality, on-time delivery, and other key performance measures can still occur at a later date. While many suppliers disclose these events to customers relatively quickly, this is not always the case. 

For example, while weather-related impacts are generally easier to spot, issues like cybersecurity attacks, political unrest, and sanctions can be much harder to identify and resolve. According to an annual report by cybersecurity company Arctic Wolf, “50% of organizations experienced a breach in the past year… out of those affected organizations, 72% did not disclose the breach when it occurred.” These more complex issues may also go undisclosed for a period of time after they occur—if they’re disclosed at all.

Additionally, these risks can also affect a supplier's sub-tier supply chain, a part often overlooked in traditional screening processes. For example, weather-related disruptions may impact sub-tier suppliers in distant locations, such as China, causing delays in the supply of finished goods. The traditional vetting process, which typically occurs once a year or less, doesn’t effectively capture ongoing risks within a supplier’s broader network. As a result, disruptions in the sub-tier supply chain—whether due to geopolitical events, natural disasters, or other factors—often go undetected until their delayed impact is felt by the customer. When these issues finally reach the direct supplier, the resulting delays can be significant and costly, highlighting the need for continuous monitoring that traditional surveying methods fail to provide. Continuous monitoring and updated supplier surveys are essential to address these challenges and ensure supply chain resilience.

2. They Expose You to Long-Term Risks, Including Sanctions and Bankruptcies

One-time supplier screening programs are valuable for identifying immediate risks but often fall short when it comes to detecting long-term changes that could compromise the supply chain. These gaps leave companies vulnerable to evolving risks that go unnoticed between initial supplier risk assessments and infrequent follow-ups.

For example, a supplier may be navigating bankruptcy while continuing to deliver products on time and with good quality. Although this might not immediately disrupt operations, it represents a significant long-term risk that companies need to monitor. Without ongoing supplier surveying or assessments, critical red flags like these can easily go unnoticed.

Sanctions are another example of risks that can slip through the cracks. A direct or sub-tier supplier could be added to a sanctions list between the initial assessment and the next scheduled follow-up. When these changes are missed, they can lead to major disruptions further down the line, even if the risk seems minimal at first. In 2023 alone, the U.S. added 2,500 entities to its Specially Designated Nationals (SDN) List, a roster of individuals and organizations subject to sanctions. This represents a 16% increase in sanctioned entities in just one year. 

Additionally, a supplier’s Environmental, Social, and Governance (ESG) score could change dramatically due to shifts in company policy, which might have ripple effects on the product being delivered. These are just a few examples of situations that a one-time supplier screening process would miss, but that could directly impact product delivery, quality, and more in the future.

3. They Cut Into Your Visibility for Ongoing Compliance Monitoring

In today’s landscape of increasing regulatory scrutiny, ensuring that suppliers maintain compliance is no longer optional—it’s a critical necessity. With global regulations like RoHS, Critical Material Reporting (CMRT), and the EU Battery Directive evolving rapidly, companies need up-to-date information on their suppliers to meet compliance requirements. Relying on one-time supplier surveys or assessments can lead to gaps in due diligence, exposing businesses to significant legal and ethical risks. 

Environmental regulations, for instance, require businesses to ensure that their suppliers' practices align with current standards. However, without continuous supplier surveys and ongoing compliance monitoring, companies risk falling behind on these requirements, leaving themselves open to fines, delays, and reputational damage.

In addition to environmental regulations, ethical standards are another area where ongoing vetting of entire supply chains is critical. Many companies today strive to ensure that their supply chains are free from unethical practices such as forced labor, child labor, or other unsafe working conditions. A study by the Walk Free Foundation found that “two-thirds of consumers would stop buying a product if they learned that its manufacture involved exploiting workers.”

As social expectations and legal requirements around ethical sourcing continue to rise, businesses are expected to proactively monitor supplier practices to align with these standards. For instance, a supplier might initially meet ethical sourcing requirements but later fall out of compliance due to cost-cutting measures or internal issues. Regular surveys and supplier risk assessments allow companies to detect such issues early, ensuring they can respond swiftly to maintain both regulatory compliance and consumer trust.

In this complex environment, moving beyond one-time screenings to implement continuous supplier risk assessments is no longer a best practice—it’s a strategic imperative.

4. They Don’t Align with New EU Regulations Around Supply Chain Compliance 

The European Union (EU) and many of its member states have recently enacted legislation that now mandates ongoing vetting and management of suppliers. Key regulations such as the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D), and European Deforestation Regulation (EUDR) mandate regular supplier risk assessments, emphasizing the importance of continuous oversight.

Additionally, many individual countries in Europe, such as Germany (German Supply Chain Due Diligence Act), Switzerland (Swiss Supply Chain Act), France (Duty of Care Law), and Norway (Norwegian Transparency Act) have all enacted similar legislation requiring the screening of suppliers for human rights and child labor violations.

These new regulations mark a new era for compliance and supplier monitoring. Ongoing supplier monitoring and corrective action for human rights violations will no longer be suggested or recommended as good practice—it will be required for businesses of nearly every size operating in Europe. Many of these laws allow significant fines to be taken against global revenue of companies operating in Europe. With hefty fines based on global revenues for non-compliance, these regulations underscore Europe’s commitment to supplier transparency and ethical sourcing. Businesses must adapt to these new laws, ensuring they are continuously tracking supplier performance and compliance to avoid serious legal and financial repercussions.

5. It Doesn’t Allow Companies to Effectively Track & Maintain Quality

Maintaining consistent quality across the supply chain is vital for companies aiming to ensure customer satisfaction and avoid costly disruptions. While a one-time vetting process may confirm that a supplier meets quality standards at the outset, it is unlikely to ensure sustained quality over time. Suppliers can start out meeting expectations, but fluctuations in demand, workforce changes, or shifts in management can all impact product quality.

Without regular supplier risk assessments, companies may not uncover quality issues until they manifest in defective products or, worse, in the hands of customers. Implementing continuous quality monitoring—such as periodic audits, product testing, and feedback loops—allows companies to detect discrepancies early and take corrective action before they escalate into larger issues. 

In Summary

One-time supplier screenings may have sufficed in the past, but they no longer meet the needs of today’s rapidly evolving supply chain landscape. Continuous monitoring is now essential to identify risks like bankruptcies, sanctions, and quality issues before they disrupt operations. With increasing regulatory pressures and higher stakes for compliance, companies must rethink how they assess and manage supplier relationships to stay ahead of potential risks. This shift toward more ongoing monitoring ensures businesses can adapt to emerging challenges and maintain supply chain resilience in an increasingly unpredictable supply chain environment.