‍Introduction:

From the pandemic’s ripple effects and geopolitical instability to labor shortages and evolving regulations, organizations are under mounting pressure to respond in real time while building long-term supply chain resilience.

Procurement and operations teams are feeling the squeeze from all sides. Nearly half (47%) of organizations are cutting costs, 29% are renegotiating contracts, and 16% are delaying digital procurement investments in an effort to ensure supply chain continuity and to meet rising stakeholder expectations. Amid this pressure, one trend is becoming clear: the cost of maintaining the status quo is indefensible.

Resilience isn’t just about managing disruption — it’s about building smarter, faster, and stronger supply chains before the next disruption arrives. In this blog, we break down the three critical areas where inaction creates real business risk:

1. Supplier Cost Control and Operational Efficiency
2. Small Supplier Risk Management
3. Workplace Safety and Compliance

Supplier Cost Control and Operational Efficiency

In an era of persistent disruption and cost pressures, inefficient supplier management is more than just a nuisance — it’s a liability. Manual processes, siloed systems, and delayed onboarding quietly chip away at margins and operational agility.

According to the Hackett Group, a company with $5 billion in annual expenses will spend over $1 million per year in labor costs for supplier onboarding. This figure doesn’t account for opportunity costs due to missed savings, delayed project starts, or avoidable disruptions.

Here are five common inefficiencies that raise supplier-related costs and reduce operational agility:

• Prolonged onboarding timelines
  Without automation and standardization, onboarding can take anywhere from 30 to 180 days, delaying project timelines and driving up overhead, which are ultimately passed on to clients.
• Time-intensive manual workflows
  Procurement teams estimate they spend over 22% of their time managing manual processes — time that could be redirected to strategic initiatives.
• Decentralized systems
  Juggling disconnected platforms across regions leads to redundant qualification efforts, inconsistent standards, and regulatory gaps.
• Limited analytics capabilities
  Without centralized data and performance insights, companies miss out on strategic opportunities like supplier prequalification and cost optimization.
• Outdated compliance tracking
  Manual certification collection and spreadsheet-based tracking increase the risk of lapses, errors, and noncompliance, raising administrative burden and liability.

Small Supplier Risk Management

Small and micro suppliers are often essential to project delivery, especially in industries like construction, manufacturing, and logistics. But without proper oversight, these vendors can also become a significant source of hidden risk.

Small companies (fewer than 100 employees) account for nearly half of all non-construction workplace fatalities and 73% of construction-related deaths. Micro suppliers with fewer than 20 employees contribute significantly to both categories. These smaller firms are also responsible for roughly 70% of all OSHA citations.

The cause? Most small suppliers operate with limited resources, which often means:

• Inadequate safety programs or training
  Many lack structured safety protocols and access to up-to-date training for workers.
• No dedicated HSE staff
  Without internal personnel focused on health, safety, environment, or regulatory obligations, critical issues go unaddressed.
• Disorganized or incomplete documentation
  Insurance, certifications, and other essential records are frequently outdated, missing, or managed manually.
• Lack of business resilience
  Smaller firms typically have limited capacity to absorb disruption, whether due to financial shocks, labor shortages, or supply delays.
• Unassessed risks
  Cyber, environmental, and regulatory exposures often remain invisible without standardized assessments and centralized qualification.

Engaging small suppliers without proper qualifications and visibility exposes organizations to a wide range of risks. Safety incidents, insurance gaps, and compliance failures frequently go undetected until they cause real damage. Project delays, reputational harm, and even contract losses become more likely — especially with decentralized operations and inconsistent monitoring processes.

Modern supplier platforms enable centralized oversight, allowing companies to assess small vendors for safety, financial health, insurance coverage, and compliance history before engagement, ensuring essential partners don’t become costly vulnerabilities.

Workplace Safety and Compliance

Safety and compliance are not separate from operational efficiency or cost control — they are central to both. When safety processes are fragmented or reactive, organizations face higher risks, reduced adaptability, and significant financial exposure.

In 2023 alone, the U.S. recorded 5,283 workplace fatalities, with total costs reaching $176.5 billion. And yet, many businesses continue to underinvest in scalable safety programs, especially during economic downturns. While cutting back on safety management might appear cost-effective in the short term, these decisions often result in preventable incidents that carry far greater consequences.

Common safety and compliance challenges that quietly raise risk across supply chains include:

• Underfunded or inconsistent safety programs
  During downturns, suppliers may reduce training or cut corners — increasing the likelihood of costly incidents.
• Manual tracking systems
  Spreadsheet-based methods can’t flag lapses in real time, leading to monitoring gaps and delayed responses to noncompliance.
• Fragmented oversight across multiple worksites
  Disconnected systems make it difficult to enforce standards consistently or detect issues early across a distributed workforce.
• Siloed safety and compliance data
  Without centralized insights, companies struggle to spot trends, flag high-risk suppliers, or identify systemic weaknesses.
• Regulatory exposure from compliance failures
  Missed certifications, expired insurance, or overlooked incidents can result in serious violations with fines exceeding $165,000 per willful offense.

By digitizing safety tracking, automating certification validation, and using leading indicators, such as near-miss reporting and audit outcomes, organizations can identify risks before they escalate. This shift improves regulatory readiness and strengthens resilience and trust across the supply chain.

Conclusion: Inaction Has a Cost

Manual processes, fragmented oversight, and reactive risk management quietly erode performance. Supplier onboarding delays, unmanaged small vendor risks, and outdated safety tracking slow down operations while driving up costs, increasing liabilities, and compounding long-term exposure.

Leading organizations aren’t waiting for disruption to force change. They’re investing in automation, real-time visibility, and proactive safety oversight to reduce risk and drive efficiency. In a supply chain environment where volatility is the baseline, taking action isn’t just an option — it’s a necessity.

If your organization is still relying on manual processes, fragmented oversight, or reactive safety programs, the hidden costs may be adding up faster than you think.

Download The Cost of Inaction: Why Supply Chain Risk Management Is a Necessity in Today’s Business Environment to uncover how inaction impacts cost, compliance, and resilience. Learn how leading organizations are building smarter, safer, and more agile supply chains.

Avetta is a SaaS software company providing supply chain risk management solutions. Avetta’s contractor management platform is trusted by over 120,000+ suppliers in over 120 countries. Visit Avetta.com to learn how our solutions help businesses reduce risk and operate with confidence.