Supply Chain disruption issues
Updated: Apr 24, 2020
The Coronavirus pandemic may have affected your business. In addition to the serious health concerns, the Coronavirus outbreak has had a severe impact on global trade and commerce. The epidemic and the associated quarantine and travel measures has affected businesses and trade and commerce globally. The construction, manufacturing, travel and transport industries and their supporting supply chains have been particularly affected by the impact of the regulations restricting the movement and supply of goods and services. Most businesses reliant on a supply chain that involves China are facing disruption to their supply chains.
Many businesses have been forced to suspend their operations or find alternative means of operating their businesses. The impact on supply chains has affected many businesses in the UK. Some businesses are still trading, some have closed down permanently or are in the process of doing so, some have suspended their operations whilst others are considering their next steps.
We have been asked by clients how they can deal with the impact on their supply chain. When considering the impact of the pandemic on your supply chain we would advise that you review your contractual position.
Be prepared and plan ahead! Talk to your suppliers and customers now if you are worried about supply chain disruption caused by coronavirus. Where you have significant contracts in your supply chain it is essential that you manage the reputational risks of being unable to supply customers early on. Look at how you will address claims from your suppliers for non-performance and breach of contract and the steps that you need to take to ensure that you or your suppliers continue to meet your/their obligations under the contract. Also consider how you can seek relief from your suppliers if they fail to meet their contractual obligations. Do your contracts have force majeure clauses, time is of the essence clauses, service levels and default clauses and liquidated damages clauses?
You should be engaging in contingency planning to deal with the implications for your business and your ability to service your customers. Check and review your supplier contracts. How will your customer contracts protect you if your suppliers fail to supply you with the products that you need? Speak to your suppliers, discuss the problems with them and seek to enter into a revised contract with them if possible. Consider arranging to source products from other suppliers with their consent if possible. If a supplier seeks to rely on force majeure, do you know whether you are entitled to declare force majeure under your customer contracts?
Looking at the business continuity aspects, will you and your staff be able to engage with customers remotely eg via Skype video conferencing? Further, can your business cope if some of your staff are ill or self-isolating at home? Can your business and staff operate from home for an extended time? Do you have the necessary remote working facilities?
Even if you are not experiencing any impact at the moment it is essential that you plan and prepare for what may happen. The earlier you prepare, the quicker you will be able to move when the need arises.
Specialist Business and Commercial Solicitors
If you require advice on the current Coronavirus situation and how this will impact you, please contact us. We are specialist Business and Commercial Solicitors based in Bedford and operate nationally.
If you would like to talk through the consequences for you, call our Coronavirus Helpline on 01234 938089 or e-mail us at firstname.lastname@example.org and one of our Helpline team member will be in touch.