Why You Need to Renegotiate Supplier Contracts Now
The New Normal
As businesses slowly start to re-open, the reality is we are not going to back to the normal we knew before COVID-19 anytime soon, if ever. You have heard it many times now; “The New Normal” is being created as we speak; virtual work, social distancing, staggered work shifts and personal protective equipment for non-healthcare settings are all being figured out and defined as we speak.
Words like “Supply Chain” and “Procurement” relatively unknown by the average Canadian are now becoming commonplace and gaining more awareness for their criticality and fragility yet vital to keeping the economy and yes, essential services like health care going.
What about the average business? Isn’t the Supply Chain and Procurement important for them? The answer is YES, it always has been but, with the exception perhaps of large enterprise (even that is debatable), no one paid much attention until now, or if they did, it wasn’t with an eye to being so business critical.
Read the Fine Print Now
If you have not thought about it, you need to and more importantly, you need to read the fine print now. I am talking about your supply contracts. If we are going to get this economy firing on all cylinders again, we need to ensure the supply of goods and services is flowing and that your relationship with your supplier is good because you absolutely are going to need them as much as they will need you, now more than ever. We truly are all in this together.
You need to review your contracts now and prioritize those that are mission critical to your business. You need to ensure you have the optimum terms and conditions that are relevant for your business now. Not when they were negotiated last year or even before that. Things have changed and, in some cases, dramatically.
You need to work with your supplier very closely so that your contracts and the relationship itself, reflect “The New Normal”. Supply disruption and risk is all but certain to continue and to be expected, regardless of your business. You need to shore up contracts and relationships now. What does your contract stipulate about supply disruption and prioritization, termination, limit of liability? Do you even have a force majeure clause? Should you use it? It works both ways, so you need to talk to your suppliers about how to address these terms and conditions to benefit and protect both parties. They need to be fair, balanced, and relevant to our current times.
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