The Lotus scenario is one of a 'multiple whammy': a number of the firms suppliers claim they are owed a total of £23m and are threatening legal action. The question of 'too big to fail' has re-emerged, with HMRC being asked to show some tolerance towards Lotus so that Lotus can maintain its cashflow. That's an interesting twist in itself - should HMRC agree in the hope of helping Lotus survive and look forward to a future revenue stream, or should HMRC demand their pound of flesh and risk being the straw which breaks the camel's back?
Anyway, £23m appears to be owed to suppliers at 90 days overdue, with a further £7m at 30-90 days. If one or more of those suppliers feel they have no alternative but to sue the whole edifice could crumble - it's an exponential Prisoners Dilemma:
- HMRC have a payment risk;
- Lotus are at risk from HMRC saying 'pay up now';
- Lotus' suppliers are at risk from the decision HMRC make;
- Lotus are at risk from one of their suppliers (as are HMRC);
- All Lotus' suppliers are at risk from the potential actions of one their peers.
Needless to say car production is suffering too!
SRM was once little more than a potential exam question; a hypothetical - that's no longer the case. If anything the Global Financial Crisis, has increased the likelihood of catastrophic impacts throughout supply chains. I am now coming to the conclusion that SRM or supply resilience will replace cost reduction as the #1 priority for CPO's - is it your's?