Proactive Analysis and Protocols Can Reduce Costs and Better Ensure Continuity of Supply
The extent of disruption caused by COVID-19 is unknowable at this time. However, it is likely that there will be suppliers unable to economically weather the storm. Having represented manufacturing customers and suppliers for decades, one thing is certain: even the most sophisticated entities make costly mistakes in addressing distressed suppliers without realizing they paid more as a customer than was necessary. “We only know what we know,” and preparing a customer to successfully address distressed supplier situations requires a different skill set than in representing or being a quality supplier.
Wrong moves at the very outset of troubled supplier matters can be the most costly. Immediate preparedness can reduce costs. As just one example, often a “Tier 1” manufacturer acts also as a “Tier 2” by selling product to its supplier, which the supplier then works on and sells back to the Tier 1 manufacturer. Failure to recognize that situation or have advisers that understand the resulting practical, financial and legal implications and how they relate to other customer positions can lead to losses that could have been avoided by early action.
Continue Reading How Customers in the Automotive Supply Chain Can Prepare for Distressed Suppliers Resulting From COVID-19