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March 05, 2020

Crisis Readiness - Operations

In the event of a crisis, we must be prepared for the fact that our suppliers may not be able to supply at normal volumes, or even at all, for a period.

 

The global supply chain is already under significant pressure, so organisations are starting to identify alternative suppliers, and are working with their suppliers on joint ways to genuinely manage bottle necks that are now having massive implications to the movement of goods.

 

Bear in mind that all of these issues could have implications for the fulfilment of contracts, which should be discussed now in advance of any crisis. Questions you may need ask your organisation are:

  • Who are our key suppliers, and what are our critical supplies?
  • How are our suppliers likely to be impacted?
  • What contractual terms do our suppliers have with us, and what do we need to reasonably negotiate with them? e.g. leniency in penalty clauses
  • What are our contractual responsibilities? e.g. accounts payment timeframes; and what discussions might we need to agree on altered terms (on a temporary basis)?

 

The impact on business operations will vary widely across each business type and industry. Examples of impacts include reduced contract labour forces, managing your maintenance programme such as if you use vital piece of equipment knowing how to access parts or servicing if your suppliers are unable to provide normal services, or fluctuations in international currencies affecting buying power or revenues.

 

If you need some tailored analysis for your particular situation, get in touch with the team at K3 Consulting. Our team at K3 Legal are also able to provide advice on contractual obligations and options.

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