Don’t bank on it

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Anyone scanning the weekend papers could be forgiven for thinking that there was only one event – the start of the Premiership football season.

But my eye was drawn away from the rich boys’ toys by an item in the “Sunday Telegraph” which said that BAe Systems had issued a warning that its supply chain was at risk from suppliers failing to obtain adequate credit.

The story highlighted the fact that there are “tens of thousands of smaller manufacturers that are far more vulnerable to the funding squeeze than the company itself”.

The warning was made in BAe’s half-yearly report, in a list of the principle risks to its business.

Of course, this issue has been the focus of much discussion in supply chain circles for some time. The fact that it hit the headlines in the national press highlights the degree to which the business environment has changed in little more than a year.

But it is clearly moving up the corporate agenda. It is apparent that major corporations can no longer rely on the fact the suppliers will be able to find adequate sources of funding without support.

The market has already seen the growth of specialist providers of supply chain finance. The question is: are we seeing a permanent shift in the way supply chains are funded or will there be a response from the traditional sources of finance – the banks?

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