Managing supplier risk top priority for OEMs

12/06/2010

Small- to mid-sized companies often supply very large, global OEMs and that can spell trouble if those suppliers are not financially stable. Let’s face it, small molding and moldmaking companies do not have the financial wherewithal that big corporations do, and many got caught short in the downturn when banks cut off financing to many smaller suppliers. In some cases, the OEM has provided financial help to their major supplier just to keep them from failing.

A study conducted by KPMG International and produced in collaboration with the Economist Intelligence Unit, surveyed 196 senior executives worldwide to under how the supply chains of industrial manufacturing firms are shifting as a result of the downturn. One key finding stood out in the survey’s results: Management of supplier risk has become more hands-on as a result of the downturn, but by avoiding certain risks, companies may be losing out. The recession has also caused companies, as one interviewee puts is, “to sharpen our pencils” on supplier risk. In some areas, however, the tendency seems to be to avoid potential problems altogether, or diversify around them, rather than to understand the risk, the study noted....
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