On a trip to Europe to meet with a critical sole source supplier with a history of late deliveries, the problems became obvious. The factory was in a small basement in the owner’s villa in a residential neighborhood. There were only a few employees and obvious limited manufacturing capacity.

But the real issue was company leadership. The company's owner and chief technologist was quite elderly and undergoing medical treatment. His daughter, in charge of production, was temporarily helping him and did not seem to have much interest in running the company on a long-term basis. The future viability of this sole source supplier was in question.

Succession planning for suppliers, ensuring ongoing company operations in the event of changes in management or ownership, was a newly added category in my company’s supply chain risk audit framework. It was becoming an increasingly important one, especially for sole source suppliers like these.

One of our visiting team members wanted to immediately address this issue. Forgetting that we were working through an interpreter, and using easily misunderstood slang, my colleague pointed to the owner and asked, "What would happen if he were to get hit by a bus?" Which was quickly translated into "I hope you get hit by a bus."

After an extended mea culpa, an international crisis was averted but the root of the issue remained. How are companies dealing with ownership, leadership and management changes to ensure ongoing operations?

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The older workers are leaving, the younger ones are not staying very long and your dependency on stable supplier relationships, often with sole and single source suppliers, is increasing.

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More than 10,000 baby boomers reach retirement age every day in the United States, according to the U.S. Census Bureau. Between now and 2029, baby boomers will continue reaching the traditional retirement age of 65 at a rate of one every eight seconds. This ever-increasing drain is having a profound impact on suppliers throughout the supply chain.

There are other important changes in the workforce as well. The U.S. Bureau of Labor Statistics reports the median length of time wage and salary workers have worked for their current employers is four years. The median tenure of workers ages 55-64, those reaching retirement age, is 10 years; three times that of workers ages 25-34.

Consider this impact on your key suppliers. The older workers are leaving, the younger ones are not staying very long and your dependency on stable supplier relationships, often with sole and single source suppliers, is increasing.

If you see two or three people with graying hair speaking to each other in the coffee room these days, chances are they are chatting about retirement, or the more socially acceptable term, their "next chapter." Organizations of all sizes need to come to grips with an aging, departing workforce. Chances are, the conversation you have with your key suppliers about succession planning will not be a surprise to them, as they may be passively dealing with it, but it may finally spur them to action.

Companies of all sizes represent risk. Small companies without next generation interest might hang out a for sale sign, or worse, close their doors. Mid-sized companies would most likely remain in business, but the relationship and operating principles may change as leadership changes. And large companies seem to be dancing in a continuous M&A ballet. Your business is most likely the farthest thing from their mind as they make massive financial bets.

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Sometimes strong relationships and excellent service make us look the other way, ignoring the risk right in front of us.

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The danger doesn’t stop with ownership. Succession planning includes the entire pipeline, in executive leadership and across all functions. Successful succession planning minimizes disruptions when key people leave. Companies often fail to address the talent pipeline, ignoring the development of high potential employees until it is too late. There needs to be a plan for a well-executed handoff of responsibilities to keep the operation humming.

Here are five questions that you might want to address with suppliers in a periodic review.

1. What are your plans for the long-term viability of your business?
2. How confident are you that your organization’s talent pipeline is sufficient for your future leadership needs?
3. What is your annual employee turnover number?
4. How many of your leaders are within five years of retirement?
5. What do you consider the primary obstacle for succession?

Of course, suppliers are under no obligation to tell you about their future plans. They may provide little to no notice before ceasing operations or making significant leadership changes. They want to keep your business for as long as possible. Savvy buyers may see signals that get their attention, including innocuous comments by company leadership, changes in supplier performance due to management changes or the loss of key employees.

Sometimes notice comes during a visit.

Ollie was the owner of a small local machine shop that flawlessly handled all of the engineering prototypes and initial production runs for my company. Ollie’s shop was a second home to engineers. Over the years, his performance won several MVS (Most Valuable Supplier) awards.

He plopped down in the chair in front of my desk and sighed, complaining of some recurring back pain and an upcoming appointment with his cardiologist. Ollie also mentioned his oldest daughter, the current general manager, had decided to go back to school and get her teacher’s license. He also bragged about having just winterized his lakefront cottage and his purchase of a new boat.

"Ollie, if I didn’t know better, I’d say that with all these changes you are about to close your doors and move to the mountains," I said nervously.

He replied, "My business has quietly been for sale for the past 6 months and I didn’t have the heart to tell you. If I don’t have a buyer by the end of the month, I’m hanging out the ‘gone fishing’ sign."

As for Ollie, there was no buyer, and he closed his doors about a year later. Loyal to the end, he kept his shop going until a new prototype supplier was found and the engineers were comfortable. He also kept his production line going to make sure all the parts he manufactured had new qualified sources. Ollie also had an aging workforce, all moving on to their next chapters together.

In hindsight, we all knew Ollie’s company couldn’t last forever, especially noticing the business taking a toll on his health. But we wanted it to. Sometimes strong relationships and excellent service make us look the other way, ignoring the risk right in front of us.