Brother, Can You Spare A Dime

About a month ago, John Trentacosta wrote about a subject that no one wants to talk about.  Fact is, an otherwise phenomenal supply chain can be brought to its knees when one partner in the chain runs into financial trouble.  A business relationship with a pauper is not sustainable.

Some early warning signals with suppliers - the canaries in the coal mine - include: requests for price increases, early payments, accelerated terms, or even financing support; late deliveries or quality degradation; failures to appropriately invest in IT and/or other assets; maintaining spend during downturns; delinquent taxes, deteriorating receivables, and extended payables; and bad press, among others.

Due duiligence on the front end can help prevent problems on the back end, but sometimes bad things happen to good people.  That's when an early response team reaction to early warnings can pay off.  Sometimes, you've got to pull the plug.  But, often you can mutually develop work-out plans to let the troubled partner survive long enough to prosper  - and to keep your supply chain humming in an unrelentingly competitive marketplace.