One customer is not a market

It is Tuesday, 7:40 in the morning, and the email is two lines long. Procurement at the plant that buys sixty-eight percent of your work is “evaluating the supplier base for the coming fiscal year.” It is polite, and you have read it three times.

You built this shop over eleven years. Pipe skids, platform steel, repair work on short notice, on a channel where short notice is the norm. You held the standard, hit the date, and took care of the crew. The buyer at that plant calls you by your first name. For years you were the best vendor they had, and you still may be. That does not change what the email is.

Why is one big customer a risk if the work is good?

A customer is a decision made by one or two people on a given Tuesday. A market is a reason money lands, and it lands whether a particular person likes you or not.

Look at the email from their side. A procurement team asked to reduce vendors is doing its job. It is cutting the number of relationships it has to manage, and the vendors it keeps will be the ones easiest to defend in a meeting. You may be that vendor. You may not. Either way, the decision sits in a room you are not in, on a calendar you cannot see.

Your quality did not slip, and your price is not the issue. The exposure came from the shape of the revenue, and good work does not fix that. Here is the arithmetic: when sixty-eight cents of every dollar come from one buyer, your payroll, your lease and your bonding depend on one signature.

Why do I think of it as an alternate airport?

A pilot planning a trip names an alternate, a second airport that is open and suitable if the destination closes while the airplane is in the air. Pilots do not plan one because they expect the destination to fail. They plan one because fog, a disabled aircraft on the runway or a field closure is a condition the pilot does not control, and it makes no difference how good the landing would have been.

Your plant is the destination. You have flown there beautifully for eleven years. A procurement review is the weather that closes a field, and you filed no alternate. The rest of this story is how to choose one.

What does it mean to anchor to the flagship?

Every regional economy has flagship industries, and around each flagship sits a fleet: the suppliers, the employees, the banks, and the smaller companies that service all of it. In Houston, energy and chemicals are a flagship. The Port is another. The hospital systems are another. Money lands in the flagship first, and then it flows down through the fleet, to prime contractors, to second-tier suppliers like you, to the employees of all of them, and to the shops where those employees spend.

So I anchor to the flagship industry, or a group of industries, and not to a single customer. Your plant is one customer in a fleet of many. The skills that earned you sixty-eight percent of its work would also earn work from the other operators on the same channel, from the contractors that serve all of them, and from the turnaround crews who show up on a schedule anyone in the business can read.

Then I hedge. I will not anchor to oil and gas at a hundred-dollar barrel unless I am tied into something that does not move with it, and in my city that something is healthcare. Hospital systems tend to keep building when a barrel of crude drops. They need stainless fabrication, piping and platforms too, and in my experience few shops on the channel have thought to call them.

The bridge

The order matters. Do not start with a brand-new industry. Start by widening from the one customer to its industry, because it costs the least. The certifications are the same. The reputation travels. Other operators already know the plant you serve, and being a trusted vendor to one of them is a reference. You are not asking anyone to take a chance on a stranger.

Then add the hedge, one buyer at a time, in a second flagship. This is the Follow the Money move from the book, and it is free to use: find where the money lands, trace who touches it after it lands, and stand where it flows.

The move for this week

Draw your alternate chart on one page, four columns.

First, your biggest customer and its share of your revenue. Write the number. Then write the share you could survive losing, so the gap between the two is visible.

Second, five other operators in the same industry within a hundred miles, and the name of the person who signs for contractors at each. If you cannot name the person, write “unknown.” That is your call list.

Third, what the flagship’s money is doing this quarter: expansions announced, turnarounds scheduled, permits pulled. Each item on that list is a signal that money is about to move.

Fourth, one buyer in a second industry, with a first name beside it.

Then call your commercial banker and ask where the market is going. Bankers see which plant is expanding and which one is about to let people go, usually well before it is announced. They are the weather report for your market. Get the briefing before you set a course.

Reply to the procurement email, keep serving the plant well, and start filling the chart. One customer is a destination. A fleet is a business.