In the present frosty economic climate one of the biggest problems facing suppliers is obtaining credit cover for deals. The insurers are playing hard to get, and who can blame them with high street names falling by the wayside and many more expected to fail after the Christmas trading period. But good news for suppliers could possibly be on the way.
In November, the French government committed itself to state-backed credit insurance, supporting companies that were finding it difficult to get cover. Now the UK government is considering a similar support package for suppliers, following pressure from the Conservative opposition and meetings between Lady Vadera, the business minister, and leading credit insurance companies.
Although there may be grounds for hope, a UK state guarantee for all credit insurance, along the lines of the French model and the Conservative Party’s proposal, does not appear to be on the cards. However, it’s clear that something needs to be done, preferably sooner rather than later.
Another significant danger to the supply chain has been amply illustrated by the collapse of the iconic high street brand, Woolworths. EUK, the wholesale arm of Woolworths that supplies DVDs and music to retailer Zavvi, among others, has caused major supply issues for Zavvi following Woolworths’ collapse. The dangers of outsourcing the whole supply chain to a third-party are now starkly evident to Zavvi, faced with no supply of product in the lead-up to the most important trading period of the year for music and DVDs.
It wasn’t that long ago that outsourcing was seen as the intelligent option – which was fine when risk of failure was low and all was rosy. Now as the risks mount, outsourcing takes on a slightly different complexion.