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

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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