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Supply Side Scrutiny

Companies need to become more aware of the potential financial risks their suppliers face and what steps to take to help support them.

By Donna Miskin | Updated on April 01, 2009

Financial supply chain management tends to focus on a horizontal path, monitoring cash flow from order to delivery through to final payment. However, these days it is critical for buyers to be aware of the potential financial risk their suppliers face. Such financial difficulties may impact timely delivery of goods or services buyers need to ensure continued operation. Constantinides calls paying additional attention to suppliers’ financial health “vertical awareness.”

T&R: What should companies do first? Constantinides: Gauge your suppliers’ financial health. A supplier’s financial information is often difficult to determine but it’s important to know if your supplier is adequately capitalized and able to deliver.

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