Shock waves of the earthquake disaster in Japan are reaching the German economy. Because bottlenecks at several suppliers are threatening due to the production loss, automotive suppliers like the seat manufacturer Grammer or the lighting specialist Hella are preparing for the introduction of short-time work. "Japanese supply parts are found in just about every car", says Gerd Kerkhoff, Managing Director of Kerkhoff Consulting in Düsseldorf. "That's why German companies will also lack the components for further processing."
The devastating natural disaster is spotlighting the poor crisis preparation of many businesses: "Especially small and medium-sized companies still frequently rely on a few suppliers with whom they handle the largest volumes for their business", says Kerkhoff. That renders their business model vulnerable in case of unexpected failures. To prevent this, companies would have to increasingly concern themselves with building up alternative suppliers.
Smaller companies are doing worse in planning
In fending off production failures which are due to supply bottlenecks, small and medium-sized businesses are in a significantly worse condition than large-sized companies. Only 14 percent of the medium-sized businesses have a risk management system in purchasing. A total of 43 percent even indicate not to take any measures at all to limit any risks of failure. That's the result of a study by the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach and the University of St. Gallen on behalf of Kerkhoff Consulting. The study was published in April, and many large-sized companies with a workforce of more than 1,000 persons are clearly better prepared: In this category, every second of those interviewed tries to actively manage the purchasing risks.
"You can see that the big ones are playing in an entirely different league and will also find it easier to handle disasters like the one in Japan", says Kerkhoff. To ensure fast reactions in case of supply failures, managers should also reconsider the organization of their enterprise, demands Hansjörg Fromm, Professor for Supply Chain Management at the University of Erlangen-Nürnberg and partner of the IBM Consultancy: "Every business management board must have one person responsible for the supply chain who will have an overview of the complete supply chain from purchasing via production to sales. That's the only way to find out fast how a supplier failure will affect the entire enterprise."
Those who did not prepare for bottlenecks beforehand should now already direct all their resources towards commissioning alternative suppliers, advises the consultant, Mr. Kerkhoff. "Of course, doing it on short notice will be expensive. But costs will be much higher yet if the company cannot produce at all anymore."
Because in case of force majeure, companies are not entitled to damages versus their suppliers. "If the company has an operating loss insurance, chances are actually good to have losses paid for", says Lothar Harings, foreign trade expert with the corporate law firm Wirtschaftskanzlei Graf von Westphalen. "But it must be taken into account that companies are obligated to keep their damage as low as possible." That means the insurance protection will only be effective if the affected company exhausted all possibilities to obtain the required intermediate products from other suppliers. "In this respect, it's important that a right of termination exists in case of force majeure." Otherwise problems could result if the company would want to bind itself long-term to a new supplier. |
