91% of Small Businesses are Rethinking Supplier Sourcing Strategies

A recent survey, Scaling Small: Inside the Enterprise Push to Source Smarter and Stay Competitive, found that 91% of executives say they have adjusted their sourcing strategies or plan to do so in the next six months. 

One tactic is to increase sourcing from U.S.-based small suppliers, which 71% of the respondents plan to do.

Furthermore, 17% have reshored or are in the process of reshoring production to unlock new small local business opportunities in the future. 

Additionally, 26% report increasing sourcing from non-US small businesses.

The report notes that this shift underscores the strategic role of small suppliers: 86% of leaders believe they reduce supply chain risk and improve responsiveness — and this positive perception holds true across businesses of all sizes. As a result, 85% plan to increase small supplier spend in the next year, with nearly one-third planning significant increases.

Small Supplier Drive Enterprise ROI

The research shows that working with small suppliers creates competitive advantages and financial value for enterprises. When asked about the business benefits they experience when working with small suppliers, more than half of survey respondents cited improved performance or quality (56%) and greater supply chain resilience (53%).

Thirty-four percent also credited small suppliers with fueling innovation, and 20% tied small suppliers to winning new business.

Barriers to scaling small supplier sourcing

Almost every leader (96%) said they would source more from small suppliers if finding,
vetting, and onboarding were easier. Yet, regardless of revenue, according to Supplier.io platform data, companies only allocate an average of 7% of their organization’s spend towards small suppliers. The issue isn’t a lack of interest; it’s a lack of infrastructure. 

Small suppliers, big consequences

As small suppliers become more critical, picking the wrong supplier can have serious consequences. Forty-one percent of enterprises said they experienced a failed partnership with a small supplier that wasn’t properly vetted in the last 12 months.

Of those that experienced failed partnerships, the biggest consequences were financial loss (66%), delays to key projects or product launches (48%), and customer dissatisfaction (48%). In fact, nearly half (46%) reported financial losses exceeding $10 million.