April 22, 2020

Will Your Suppliers Survive Covid-19?



Will Your Suppliers Survive Covid-19?

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eps news

Many small and mid-sized suppliers to global manufacturers are strapped for cash as the battle against Covid-19 rages on. Companies are either coming off the worst of their regional outbreak; experiencing their peak; or temporarily suspending operations. Several experts say not all of those companies will survive.

“[We saw] supplier bankruptcies during the 2009 crash and is worse,” said Bindiya Vakil, founder and CEO of Resilinc, a supply chain risk management consultancy. “There has of course been a human toll with this pandemic, and that is impacting employees themselves and the greater [global] workforce.”

Resilinc, on a recent webinar, reports roughly 65 percent of small companies based in China have about two months of cash on hand. In the U.S. and Europe, companies typically plan for four to six months of cash available.

Companies are looking at various ways to ease financial pressure, such as business insurance. The types of losses companies are incurring, according to Resilinc, are  financial losses including lost revenue; premiums paid to secure raw materials and parts; emergency labor costs; expedited freight costs; cash burn due to factory downtime; and employee monitoring and protection costs.

Unsurprisingly, said Vakil, the fine print in insurance policies is critical. Property policies usually cover physical loss or damage to insured property resulting from a covered risk. Sites must suffer physical damage, and risk must also be covered. A loss of profits because of people not able to come to work, or government travel restrictions, generally does not trigger property insurance coverage.

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Topics: supply chain risk management, SCRM Best Practices, supply chain resilience, supply chain risk, Supply Chain Impact, business continuity, coronavirus update, supply chain delays