Cancelled orders have drawn the most negative publicity, but alternative actions can leave suppliers just as vulnerable. There are real concerns that commitments to pay up could become meaningless if they end up falling into a semantics trap, deferring but not cancelling orders.
Retailers only pay for orders on receipt so delaying shipment is just as painful as cancelling orders in the short term. The reality is that many vulnerable suppliers will not have enough cash to pay their workers.
The most three important thing that brands or retailers can do:
- Immediately engage virtual approaches and expertise to systematically review and score operational and financial risk of all suppliers
- Segment and engage with suppliers which present the greatest long term risk or lost opportunity to your business within the next month
- Launch or contribute to hands on practical supplier support plans, leveraging joint business planning and operational improvement, funding support and publically available funding
Finally, make stabilising and supporting suppliers as important as bringing back customers!