Protect against supplier insolvency or where a supplier fails to deliver, leaving you unable to trade or meet the obligations of contracts that you have entered into, potentially leaving your business open to claims due to missed deadlines or non delivery.
A Supplier Failure Cover is an insurance policy that is offered to protect your business if any part of your supply chain is disrupted due to a supplier going into liquidation.
We consider a ‘supplier’ to be any provider of goods or services that your business needs to enable fulfilment of its contractual obligations.
All manufacturers from the automotive, industrial, hi-tech and medical device sectors are moving towards lean production, just-in-time manufacturing, reduced product lifecycles, outsourcing, green operations, and supplier consolidation for improved performance and greater business benefits.
Contractors in the construction industry are increasingly taking on more complicated contracts that have multiple sub contract suppliers and strong financial penelties on project time and cost overruns.
However, these shifts in business practice have brought forth new kinds of challenges.
It is now understood that supplier failures can have a far-reaching impact on the business and brand value. As supply chains continue to become more interconnected, their vulnerability to failure and disruptions also increase. From labour disputes, to unforeseen accidents and natural calamities, the production line is under constant threat, making the traditional approach towards identifying supply chain risk ineffective.
To deal with fierce competition, lean supply chains, unpredictable demands, and global operations, companies focus on improving the visibility and transparency within their supply chain. They should adopt a renewed approach to supplier risk management, where supplier relationships are based on collaboration, are more transparent, evolve over time, and where risk is proactively identified and managed at every step.
While it is impossible to eliminate all supply chain risks, a risk-intelligent approach can help organisations proactively mitigate avoidable risks, and improve the response strategies for risks that are unavoidable.
Where this risk still remains the backstop is Supplier Failure cover.
