Napoleon is supposed to have said that an army marches on its stomach. Or perhaps it was Frederick the Great, but whoever made the remark, they got one thing right. The success of any organisation depends on it being well fed. So when Zurich Financial Services reports that the number of companies saying supply chain problems have led to a drop in profits has doubled in the past five years, you realise that the emperors knew a thing or two.
To get back to the here and now. Many companies depend on SME suppliers, but it is often the latter that bear the brunt of cost-saving measures, seriously affecting their solvency. 'Strategies such as just-in-time deliveries of components and resources are now proving to be a weak link because of the economic downturn,' warns Zurich, and 'a radical increase in supplier insolvency in a floundering economy...' is a major factor 'thwarting supply chain stability'. If the supply chain breaks down, the profits are down, too.
So if only for self-interest, it's time that big companies become more caring about the solvency of their SME partners. That way they're armed for success.
Are the companies you supply concerned about your welfare? Let us know.
