In Uncertain Times, Big Companies Need to Take Care of Their Suppliers

Many large original equipment manufacturers have long been ruthless with their suppliers, demanding extremely low prices and loading them up with risks. The turmoil buffeting global supply chains is unlikely to end anytime soon, so the OEMs should reconsider their supplier policies. They include moving beyond their transactional behavior and treating suppliers more like partners, implementing greater price flexibility in contracts, and rethinking inventory levels and where in the supply chain stock is carried.

The resilience of a supply chain is dependent on the reliable performance of the suppliers who make it up, but the fiscal health of many of lower-tier firms is not visible to executives at companies several tiers up. It's important for original equipment manufacturers to have many lower tier suppliers.