Friday, November 21, 2008
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KNOWLEDGE MANAGEMENT TAGS
"Supply Chain Management"
Companies urged to help suppliers weather storm
Companies need to look at their entire supply chain when it comes to tightening their working capital and should take action to identify and assist struggling suppliers, the head of the Association of Corporate Treasurers (ACT) has warned.
Many firms are grappling with the realities of a handling working capital in a downturn, John Grout, the ACT’s policy and technical director said, and need to take a more proactive approach in order to survive.
In an interview with the Financial Times, Grout even claimed that companies should consider intervening directly with the banks of less creditworthy suppliers, in order to convince the lender that the supplier is capable of hitting its sales targets.
"If your supplier is [a critical supplier and is] suffering liquidity problems because he is losing orders and paying late, you may need to get involved with him to help him survive," he said.
"Particularly if you don't borrow from your supplier's bank it's using your credit standing to reduce your total supply costs."
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