Companies expend substantial resources managing the credit risk of customers, to protect the value of their sales. Many companies, however, do not always apply credit risk analysis to its supply chain, focusing instead on procurement at the lowest cost, and compliance with a myriad of regulatory issues. However, credit risk in the supply chain may actually pose a greater potential risk of loss. If a supplier fails to deliver product on time, the manufacturing process can be interrupted or halted, potentially idling plants at a significant daily cost to the company.
In addition to creating diversity in the supply chain, companies can manage their supply chain “credit” risk, before and after financial distress or insolvency of a key supplier.
Follow the link to read more of David Conaway’s Client Alert, “Managing Credit Risk in the Supply Chain“.
David Conaway is the Chair of Shumaker’s Bankruptcy, Insolvency and Creditors’ Rights Practice and Co-Chair of Shumaker Global and Shumaker Manufacturing. His focus is representing manufacturing companies regarding a variety of issues involving customers and the supply chain, including commercial and financial contracts, disputes, insolvency; and cross-border transactions, litigation and insolvency. David advises clients and handles matters throughout the U.S. and represents numerous foreign-based clients regarding U.S. issues, and U.S. companies doing business globally.