New Ivalua research reveals that most organisations have experienced critical supplier failures, exposing widespread visibility gaps, slow response times, and a growing need for AI-powered, data-driven supply chain resilience.
Supplier failure is becoming an increasingly common reality for businesses, yet many organisations remain ill-equipped to identify the warning signs before disruption strikes.
According to new research from Ivalua, 70 percet of organisations have experienced between one and five critical supplier failures during the past 12 months, whilst 41 percent say they are just one supplier failure away from a supply chain crisis.
The enterprise AI platform for procurement surveyed 800 supply chain and procurement decision-makers and found that organisations take an average of 25 days to identify and onboard a replacement supplier.
During that period, nearly three-quarters (74 percent) are exposed to shortages or significant operational disruption, highlighting the growing importance of proactive supplier risk management.
REACTING INSTEAD OF PREVENTING
Ivalua’s findings suggest that many businesses are still responding to supplier failures only after they occur rather than anticipating potential risks.
More than half (57 percent) of organisations admit they take a reactive approach to supplier disruption, leaving vulnerabilities hidden until operations are already under pressure. This lack of preparedness is compounded by limited visibility across several critical areas of supplier performance.
Over half (53 percent) of respondents report having little or no visibility into the cybersecurity posture of their suppliers, whilst 51 percent acknowledge that a major cyber incident affecting a key supplier would catch them entirely by surprise.
Visibility challenges extend beyond cybersecurity. The research found that 53 percent of organisations have limited insight into suppliers’ ESG performance and associated risks, 44 percent struggle to monitor suppliers’ financial health, 41 percent lack visibility into operational capacity and delivery performance, and 40 percent report limited oversight of compliance status, including certifications and regulatory requirements.
Jarrod McAdoo, Director at Ivalua, believes supplier failure has become an unavoidable challenge for modern organisations.
“Supplier failure is no longer an exception; it is a cost of doing business. The organisations suffering the most aren’t necessarily those with weaker suppliers, but those blind to risks until it’s too late,” he says.
“With inflation, tariffs, and rising costs already stretching operations, a single supplier failure can be the tipping point that pushes an already strained supply chain into collapse.”
CLOSING THE VISIBILITY GAP
The report also points to fragmented supplier data as a major obstacle to effective risk management.
Almost half (45 percent) of organisations say they do not have a single, trusted view of supplier risk across the business, making it difficult to identify emerging issues before they escalate. At the same time, 76 percent continue to rely on manual processes for due diligence and risk checks on critical suppliers.
This dependence on traditional methods is creating further vulnerabilities, with 58 percent agreeing that spreadsheets leave them exposed to human error.
Blind spots also extend deeper into supply networks. More than half (53 percent) report having little or no visibility into their sub-tier suppliers, whilst 73 percent say they would like to identify signs of supplier distress much earlier to prevent disruption before it reaches their operations.
BUILDING A STRONGER FOUNDATION WITH AI
Artificial intelligence is increasingly viewed as a valuable tool for strengthening supplier risk management, but Ivalua’s research suggests adoption remains relatively limited.
Just 39 percent of organisations currently use AI for supplier due diligence or ongoing risk monitoring. Even where AI is being deployed, its effectiveness is often constrained by poor-quality data. Half of respondents agree that their supplier data is not AI-ready, limiting their ability to scale analytics and detect risks early.
McAdoo argues that organisations should focus less on predicting every supplier failure and more on building the foundations needed to respond quickly and confidently.
“The goal is not to predict supplier failure. That is a pipe dream, considering the complexity of modern global supply chains. The goal is to build the capability to anticipate it by spotting early signals and to be ready to act on contingency plans with confidence,” he explains.
“AI can make a real difference, but is only as effective as the data it’s working with. Organisations without a strong, unified supplier data foundation will struggle to deliver meaningful value from AI investment, regardless of how sophisticated the tools are. The organisations that fix this will be the ones still standing when future disruption hits.”
For organisations facing continued economic uncertainty, rising costs, and increasingly complex global supply chains, Ivalua’s findings reinforce that resilience depends on more than contingency planning alone.
By improving supplier visibility, consolidating trusted data, and laying the groundwork for effective AI adoption, businesses can move from reacting to disruption towards anticipating it before it impacts operations.
This article was produced by the editorial team at EME Outlook and published as part of the Outlook Publishing global network of B2B industry magazines.
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