Reuters has an interesting article about the affects of the economic crisis on the supply chain. Recent bankruptcies in China among suppliers pose a serious risk to the global supply chain.
PricewaterhouseCoopers estimates that 670,000 small companies have closed across China because of the global crisis. When suppliers goes out of business, companies need to find an alternative source that will offer the same product and quality. Finding the right supplier can take time and money.
Adding to the problem is that many suppliers in China are running away from legal obligations and often just end up posting a notice on the factory door. “Many companies don’t see the point in winding up operations properly, as they simply don’t have assets to pay creditors and workers”.