In this unprecedented situation, no-one is certain what the outcome will be. As such, any financial services organisation needs to work together with both its suppliers and clients to form a united front.
Open communication is the only way to achieve this. As such, regular updates need to run up and down the supply chain so everyone is on the same page.
Pricing, inventory and costs will be impacted by large volume changes. Demand will also be erratic and difficult to forecast. How can you properly forecast?
Reactingquickly in areas like distribution formats, inventory management and online sales will be essential where credit insurance is withdrawn. Can you find effective methods of cash collection and rapidly adjust terms of payment?
Mitigatingsupplier risk can ensure your supply chain is resilient. Sourcing domestic versions of imported products can help reduce stress. Elsewhere, choosing where to prioritise payments and focusing on essential, rather than discretionary spend will help preserve liquidity.
Talkingwith both suppliers and clients is essential. Keep communications regular and open, so all your partners are aware of changes to your practices.
Actions to consider
Look at the current situation for the FS industry and identify what might be impacted by the current situation. Where your clients or suppliers might be affected, take steps to mitigate the impact.
What steps can you take now to limit the damage to your clients and suppliers? Where the impact can't be avoided, what can be done at the time to protect your business?
This situation won't go on forever. Will you have the working capital to restore your business to its current level once the pandemic is over? Take the time to forecast any 'aftershocks' and long-term consequences.
Consider these questions
What has changed and how is it impacting your clients, particularly those in other countries?
What are you doing to ensure communication channels with your clients and suppliers remain open?
Where you would previously have relied on travel to conduct your business, do you have other options to operate remotely or avoid imports?
Are you able to offer extended or other arrangements to the clients and suppliers that need them?
What can you do to support your clients and suppliers who may be struggling?
"Without adequate business oversight of third party relations across the whole extended enterprise, the many commercial advantages of working with third parties can be adversely impacted if the responsibility for managing these relations is not clearly understood and followed. The associated reputational impact may just be the start of the problems that this may cause.
You can outsource a process but you can’t outsource the impact to your business when things at your third-party provider go wrong."