BusinessBusiness Recovery31% of companies cancel contracts with suppliers, E&Y poll finds

31% of companies cancel contracts with suppliers, E&Y poll finds

Nearly a third of companies have admitted dropping their most high-risk customers in the wake of the tough economic conditions

Leading global companies are cutting ties with their customers most at risk
of collapsing as they take drastic steps to protect themselves from the harsh
financial conditions.

Ernst & Young’s Opportunity in Adversity, Responding to the Crisis study
polled 337 leading companies and 31% said they had cancelled contracts with high
risk customers.

Nearly a quarter said at least one of their key customers had collapsed.

46% of respondents said that that they had to narrowed their supplier base to
obtain more favorable terms, but 42% said they had broadened their supplier base
to ‘reduce the impact of the failure of an individual supplier,’ E&Y said.

‘Here the response to adversity is driving diametrically opposed behavior
from different companies,’ E&Y added. ‘A supplier is clearly almost equally
at risk of losing a customer as gaining a new one.’

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