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In recent weeks, many governments around the world have created stimulus and relief programs to address the economic collapse caused by the Covid-19 pandemic. But they will be too little or arrive too late to save tens of thousands of suppliers. Their ultimate customers — major manufacturers — must come to their rescue. Some are already doing so. Others should follow their lead. It’s in their own best interest. This article offers ways they can help.
Suppliers across many industries have been devastated in the last two months as their customers have cut production or shut down entirely. In the automotive segment alone, 41 of the 44 auto assembly plants in the United States had closed by March 26, according to the Alliance for Automotive Innovation. Even well-capitalized global companies are struggling: Aptiv, one of the world’s largest automotive suppliers, announced that it would draw down its entire $1.4 billion credit facility.
In response to this crisis, some large manufacturers are taking steps to financially support the ecosystem of suppliers they depend on. BHP is accelerating payment of invoices. Vodafone announced it would pay European suppliers within 15 days. Lockheed Martin has said it will advance more than $50 million to small and medium-size enterprises (SMEs) in its supply chain.
Read the complete article from Tom Linton and Bindiya Vakil at Harvard Business Review>>
