Weekly intelligence for Supply-Chain, Procurement & CEO desks

LEADERSHIP NUGGET

Supplier performance is not managed by “relationships.” It is managed by gates.

If your supplier portfolio does not define:

  • who is allowed to buy what,

  • under which evidence conditions,

  • with which cadence,

  • and with which stop rules,

then you don’t have a portfolio—you have latent dependency.

EXEC SNAPSHOT

This issue turns supplier classification into an operating system:

  • A practical supplier portfolio logic (Active / Preferred / Mandatory) that can be run in real companies.

  • A lifecycle gate system (Evaluation → Phase-in → Ready → Hold → Phase-out) that ties supplier decisions to evidence.

  • A minimum baseline that every supplier must meet from Phase-in (NDA, CoC, sanctions screening, core self-assessment).

  • A Preferred Supplier standard that protects serial business: Master Supply Agreement + performance scoring + audit cadence.

  • Clear exceptions (e.g., catalogue pencils) without destroying governance.

J.M.W. Turner. (1839). The Fighting Temeraire tugged to her last berth to be broken up [Painting]. National Gallery, London, UK. https://www.wikiart.org/en/william-turner/the-fighting-temeraire-tugged-to-her-last-berth-to-be-broken-up-1839

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Every strong structure deserves a dignified exit. Strength is proven not only in use, but in how dependency is released.

- The ProcWee™ Research Desk

WEEKLY NEWS UPDATE

Signals procurement teams can act on.

  • US demand signal: ISM Manufacturing PMI rose to 52.6 in January 2026 (expansion) — watch capacity and lead-times in categories tied to new orders and backlog movement (ISM, 2026).

  • EU supplier liquidity: ECB survey data shows a net tightening of corporate credit standards in Q4 2025 (net 7% for short- and long-term loans) — expect more fragile Tier-2/Tier-3 cash positions (ECB, 2026).

  • Freight cost baseline: Drewry’s World Container Index fell to $2,107 per 40ft container (29 Jan 2026) — useful for landed-cost and buffer-stock logic (Drewry, 2026).

  • Lane volatility (Red Sea/Suez): Maersk announced a structural return of its MECL service to trans-Suez routing from mid-January 2026 — routing is becoming lane-specific, not “one global rule” (Maersk, 2026).

  • EU border compliance: The European Commission states CBAM “successfully entered into force” on 1 January 2026 — import processes now require authorization/validation logic to avoid border disruption (European Commission, 2026).

  • Global trade outlook: WTO’s October update flagged slower trade growth expectations for 2026 — scenario planning should assume more volatility, not smooth normalization (WTO, 2025).

DEEP DIVE - ROADMAP STEP 4

Supplier Portfolio & Lifecycle Positioning

A picture of a great Friday afternoon.

1) The unit of control: Relationship scope

To keep governance practical, we can attach gates to the supplier relationship scope:

Supplier + Site (Plant) + Commodity / Process family

This is granular enough to capture risk (site and process drive quality and continuity) and scalable enough to run without SKU explosion.

2) Portfolio classification: What it changes operationally

A pyramid with three sections, showing “active supplier“ as a fundament, “mandatory supplier” as middle section and “preferred supplier” as the top of the pyramid.

Active Supplier
Used for flexibility, benchmarking, and non-critical demand—not your default for serial business.

Preferred Supplier
Your default choice for serial demand and typical new projects. “Preferred” means documented control (contracts, security, cadence, metrics)—not a subjective label.

Mandatory Supplier
Dependency acknowledged (tooling lock, certification lock, capacity monopoly, long replacement lead-time). Mandatory is not “bad.” Mandatory is governed.

3) Lifecycle gates: A simple system for organizations to gate-keep risk

Five wheels showing a lifecycle process of supplier relationships.

  • Under Evaluation: evidence collection only (no dependency created).

  • Phase-in: controlled volumes + controlled exposure.

  • Ready for Business: full release (only after gate criteria are met).

  • Business Hold: no new business; continuity only; escalation and recovery plan active.

  • Phase-out: controlled exit (last-buy, IP/tooling, alternates, buffers, contractual closure).

4) The gate system: who must meet what

Lifecycle point

Applies to

Minimum evidence required

“Upgrade” requirements

Enter Phase-in

All suppliers (except true catalogue/spot buys)

Signed NDA, signed Supplier Code of Conduct, sanctions/trade compliance screening, supplier self-assessment, acceptance of basic quality/traceability rules

Catalogue exceptions allowed (e.g., office supplies) if: no system/data access + no production impact + low substitution cost

Go “Ready for Business”

Active suppliers used in operations

Baseline pack + quality evidence appropriate to the process; financial check if operational exposure exists; audit “light”. Depending on your business, certifications could be required (e.g. IATF 16949 for automotive etc.)

If the relationship can stop production: require audit + stronger contracts even if spend is low

Become / remain “Preferred”

Preferred suppliers (serial baseline)

Baseline pack plus: signed Master Supply Agreement (supply assurance, IP/tooling, controlled price changes, liability…etc.), signed QAA, documented IT/security expectations where applicable, defined KPI thresholds and cadence; internal playbook for supplier development

Audit cadence (e.g., 1–2×/year depending on exposure), corrective action rules, escalation SLAs

Become / remain “Mandatory”

Mandatory suppliers (declared dependency by customer, technology or lack of second source options)

Preferred pack plus: continuity evidence (BCP), quarterly risk review, dual-source/exit roadmap (even if long-term), change-control discipline

Higher cadence monitoring and pre-approved emergency playbooks

Why this is practical: it binds requirements to how you use the supplier, not to abstract theory. It also allows catalogue exceptions without allowing “strategic suppliers by accident.”

Sanctions screening can be operationalized using official tools and datasets (OFAC, EU lists, etc.).

5) Preferred Supplier controls: The “real company” layer

A Preferred supplier typically carries:

  • serial demand,

  • prototype demand (next to “Challenger” suppliers),

  • and “urgent engineering” demand.

So the controls must protect you across all three modes.

Preferred Supplier non-negotiables (a perspective):

  • Master Supply Agreement: delivery assurance, IP/tooling, change-control, liability, controlled price increases (indexing rules, notice periods, audit rights).

  • Quality Assurance Agreement (QAA): PPAP/FAI expectations where relevant, claims handling, 8D response times, containment rules.

  • Security expectations where systems/data/firmware are involved (ISO/IEC 27001 as a reference point). (ISO, n.d.).

  • A measurable performance bar (below).

Your preferred suppliers should be selected based on empirical data, not on personal relationships, invitations to business dinners, or gifts.

6) Performance scoring that does not become “university work”

Use one simple rule: Preferred status is earned in data.

Two streams, one decision:

  • ERP KPI score (execution reality)

    • OTD / OTIF,

    • claim rate (and severity),

    • availability / lead-time adherence,

    • price stability and

    • relationship score (cooperation, negotiation, troubleshooting; non-ERP data)

  • Audit score (process capability)

    • e.g., 0–100 with a clear threshold

Example thresholds (illustrative, adjust by industry):

  • Preferred: ERP composite ≥ 85/100 over last 6 months + audit ≥ 80/100

  • Mandatory: ERP composite ≥ 90/100 + audit ≥ 85/100 + continuity evidence active

If a supplier fails thresholds: they don’t get debated. They get a status action (hold / probation / de-risk plan). Worth a thought is to use the “5 Whys Method” from Toyota, followed by a cooperative solution:

7) Two short real-life reminders: Why gates exist

Supply chain cyber spillover (supplier → production stop):
Toyota documented the Kojima Industries cyber incident and how it shut Japanese plant operations. An example of why IT/security expectations cannot be optional when operational dependency exists (Toyota Times, 2023).

Shipping disruption from a single malware event:
Maersk’s annual report discusses the NotPetya cyber-attack impact and business disruption. A reminder that “continuity evidence” is not bureaucracy; it’s operational survival (A.P. Moller – Maersk, 2017).

LEADERSHIP QUESTIONS

  1. Which suppliers are Preferred in practice but still governed like “Active”?

  2. Can your organization place a supplier on Business Hold within 24 hours—without internal debate?

  3. Do you have a declared list of Mandatory dependencies, or do you discover them during incidents?

PROCWEE™ 3-MINUTE DIAGNOSTIC

Capability

Fully confident

Not sure

No time / No resources

Every supplier relationship has a lifecycle status (Eval/Phase-in/Ready/Hold/Phase-out)

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☐

☐

Baseline evidence pack exists and is enforced from Phase-in

☐

☐

☐

Preferred suppliers have an MSA + QAA as default

☐

☐

☐

Preferred status is tied to ERP KPIs + audit score thresholds

☐

☐

☐

Mandatory suppliers have quarterly risk review + exit roadmap

☐

☐

☐

ProcWee™ Tools

(for readers implementing Step 1 - Step 4)

1) The Alignment Interview Method™
A structured, science-backed interview framework to align procurement teams with organisational direction at the start of a planning year. Designed for real-world conditions where budgets, roles and compensation are largely fixed.

2) Microsoft 365 Email Automation Guide
A step-by-step implementation guide to convert Outlook emails into Planner tasks with deadlines and calendar visibility. Positioned as execution efficiency without AI-driven data exposure.

WHAT COMES NEXT: YOUR PROCUREMENT ROADMAP 2026


Episode #110: Competition & Optionality
Episode #111: From Portfolio Decisions to Execution
Episode #112: Procurement Responsibility
Episode #113: Internal Authority Matrix & Decision Speed

ONE-LINE VERDICT

A supplier portfolio becomes real when classification triggers contracts, cadence, thresholds, and stop rules - not opinions.

SOURCES

Thank you for reading,


Pascal Hecker
Editor-In-Chief, ProcWee™

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