Supplier risk is often seen as a problem for large, regulated industries, but for many SMEs it remains one of the biggest hidden operational threats. Whether it’s raw materials, logistics partners, specialist services, or the SaaS platforms your business runs on, supplier failure can rapidly disrupt your ability to deliver.
This guide sets out a practical approach for SMEs to understand supplier risk from a continuity perspective and provides a realistic set of questions to ask—tailored separately for traditional suppliers and SaaS vendors.
A key starting point in continuity planning is a simple question:
If this supplier stopped providing its service, how long until you notice, and how long until it threatens your ability to deliver your critical services?
To answer this meaningfully, you need to know:
• What your critical products and services are
• The dependencies that support them
• Which suppliers sit on the critical path of your value stream
Dependency mapping is the most effective way to identify this. Unlike spend analysis, it reveals the small specialist suppliers who may be more critical than high‑value commodity providers.
It’s also important to avoid thinking exclusively like a financial services firm. Many guides assume “third party” means consultants, contractors, or cloud software. But SMEs in manufacturing, distribution, construction, retail, or engineering rely heavily on physical supply, logistics routes, process outsourcers, and equipment maintenance—often far more than on professional services.
It helps to distinguish between:
Supply – the underlying resource or material
Supplier – the organisation providing it
This reveals two fundamentally different risk types:
This difference drives the type of response you need to plan for.
Some suppliers will be multi‑sourced and inherently resilient. Others will be sole‑sourced and form single points of failure. Your aim is to identify the suppliers whose failure would create material and time‑sensitive operational impact. These are your critical suppliers—the ones you need to challenge, monitor and plan around.
If you’re struggling to identify which suppliers truly sit on your critical path, our consultants specialise in this analysis and can support you through the process.
SaaS risk: an increasingly critical supplier category
SaaS platforms have quietly become some of the most critical suppliers in modern SMEs, underpinning everything from customer service to payroll to logistics. Their convenience often hides the fact that a single outage can stop operations instantly. Because SaaS providers operate very differently from traditional suppliers, the risks they introduce need to be understood on their own terms before they can be assessed properly. Here are the key points to watch out for.
SaaS outages can halt operations immediately
Unlike physical suppliers, many SaaS systems have no offline mode. If your CRM, logistics planner, payroll system or training platform goes down, entire processes stop.
Uptime is not continuity
SaaS vendors advertise uptime SLAs, but these do not guarantee recovery times after a major incident. Continuity and uptime are not the same.
Data protection is your responsibility
Most SaaS providers operate on a shared responsibility model. They keep the platform running; you are responsible for backing up your own data. If you don’t, a data loss incident could be unrecoverable.
Transparency is limited
Large SaaS vendors rarely publish customer‑specific RTO/RPOs or detailed DR testing results. You must rely on what is publicly available, plus your own safeguarding measures.
SaaS should be mapped like any other critical dependency
Treat SaaS applications as part of the supply chain. Understand which services they underpin, whether they create single points of failure, and what fallback options you have.
Once you know who your critical suppliers are, the next step is to understand their resilience.
However, SaaS vendors are different. Huge providers such as Salesforce, Workday, Microsoft or Google will not answer bespoke continuity questions from SMEs and will not customise their recovery arrangements.
So the five questions below apply directly and fully to traditional suppliers (manufacturers, logistics providers, engineering firms, etc.), but must be interpreted differently for SaaS, where you rely on published evidence rather than supplier engagement.
Traditional suppliers:
Being a key customer often means prioritised recovery. Smaller customers may wait longer.
SaaS providers:
You cannot influence your priority. Instead ask yourself:
Are we relying on a Tier‑1 provider with mature resilience, or a small SaaS vendor whose outage could last far longer?
Traditional suppliers:
Request their BCP, check recovery timeframes, test with a scenario relevant to your supply.
SaaS providers:
You won’t get their BCP. Assess instead:
• Public trust‑centre information
• SOC/ISO assurance reports
• Documented architecture and resilience statements
• Incident history visible on their status page
And most importantly:
Do their likely recovery timelines align with our own tolerances?
Traditional suppliers:
Ask scenario‑based questions: loss of site, loss of machinery, ERP outage, or their own key supplier failing.
SaaS providers:
Vendors won’t answer scenario questions, so review evidence yourself:
• Past incident behaviour
• Frequency and quality of updates
• Redundancy architecture
• Confirmed limitations (lack of offline mode, lack of data recovery guarantees)
Traditional suppliers:
Ask about multiple sites, multiple sub‑suppliers, and spare capacity.
SaaS providers:
The equivalent question is:
Does the provider operate with proper cloud‑native resilience such as multi‑AZ replication or geo‑redundancy, and do they publish it?
If not, the SaaS platform itself may be your single point of failure.
Traditional suppliers:
Ask for communication SLAs, escalation contacts, and defined notification paths.
SaaS providers:
You cannot demand personalised communication. Instead:
• Subscribe to status page alerts
• Integrate them into your monitoring
• Define your own internal triggers to activate continuity steps as soon as an outage appears
While suppliers vary widely in their resilience and transparency, SMEs are not passive in this process. If a supplier lacks credible continuity arrangements, offers weak resilience, or cannot meet your operational tolerances, you have options: set resilience expectations as part of your commercial terms, request improvements as a condition of continued business, shift to a more robust alternative, or build your own protective measures such as buffer stock, dual‑sourcing, or internal fallback processes. Supplier risk isn’t simply inherited; it can be actively shaped by the choices you make and the safeguards you put in place.
Supplier risk for SMEs is not theoretical. It is a practical exercise in understanding who you rely on, how resilient they are, and how quickly their failure becomes your failure.
For traditional suppliers, this means direct questioning, scenario testing, and assurance checks.
For SaaS providers, it means assessing published evidence, historic performance, your own backup posture, and your own fallback processes—because large vendors won’t customise resilience for you.
By combining dependency mapping, realistic supplier challenges, and a SaaS‑specific response approach, SMEs can build a far stronger continuity position with minimal overhead.
If you’re unsure where to start or you’d like a second pair of eyes on your supplier landscape, we can help. This kind of assessment isn’t easy, and most SMEs don’t have the time or internal bandwidth to dig into supplier resilience properly—but it’s exactly what we do. If you want clarity, confidence, and a practical plan to strengthen your continuity, get in touch and we’ll guide you through it.