The way we
do business has changed overnight as a result of the Covid-19 virus and parts
of the system are breaking because of it. Suppliers are most vulnerable to this
sudden change. Guesthouses, travel agents and conference venues that rely on
corporate patronage have had the rug pulled out from under them. Others, such
as lawyers, consultants, catering and courier companies are also hurting as the
corporate machine hunkers down.

We are in a
no-win situation. Everyone is compromised, but not everyone has the same
ability and reserves to survive the crisis. In many instances, this survival is
dependent on big business that has, until now provided, the life blood for smaller
ones. The intuitive response by companies in times of uncertainty is to put the
brakes on all non-essential activities; work done today to ensure a more
sustainable tomorrow is suddenly less vital. On the other hand, actions to
improve cash reserves are top priority. The corrective action will naturally focus
inward – on the wellbeing of the business, but without regard of the knock-on
effects of decisions taken to others in the value chain.

When
partners pay the price

Consider an
action by Booking.com to offer refunds to customers who had opted for
discounted but non-refundable guesthouse bookings. “We expect
partners to refund any prepayment and waive any cancellation costs (fees,
expenses and/or other amounts) in situations where the guests/travellers
requested cancellations as a result of Force Majeure,” the company
explained in a notice to its affiliated guesthouses, which
was updated on 27 March 2020. This includes “all reservations made for
properties in South Africa with a check-in date between 26 March 2020 and 16
April 2020 (including). Domestic travel is included in the Force Majeure
conditions.”

What are the
consequences of this for guesthouses already critically threatened by cancelled
bookings due to the virus outbreak? Booking.com refers to these guesthouses as partners,
but where is the partnership if unilateral decisions are taken under the
guise of Force Majeure, without any compromise or consultation? Why was there
not an opportunity given to postpone the booking – or meet the cancellation
costs half-way?

There are
other examples where co-operation and agreement are being adopted as the way
forward, such as pre-booked conference venues that are not enforcing rights but
instead negotiating alternative dates, or consulting assignments where
e-conferencing engagement is replacing physical workshops and meetings.
Alternative solutions may not be as good as original plans, but can still get
the job done.

Opportunities
for growth; not demise

There have
been other technology-based companies that responded to their partners with
creativity. Before lockdown, Uber Eats started a marketing campaign to provide people
working from home with lunch and dinner. Launched on 17 March, this initiative aimed
to protect their drivers and partner restaurants, both financially and health-wise.

“We
expect that meal delivery could also help support restaurants who may be seeing
reduced sit-down guests where social interactions and gatherings have been
discouraged,” they explained in an email. They also detailed ways in which
their delivery staff would be protected when making deliveries and stated they
would provide financial assistance to any Uber employee impacted by Covid-19.

During the
lockdown, the above initiative was put on hold, but there are other initiatives
trying to help the restaurant industry from collapsing. This week, restaurant
payment provider Zapper launched a donation feature on its app for customers to
financially assist their favorite restaurants. “Together we can make a difference,” the told customers in
an email.

The power
to protect your suppliers

Those with influence
over their suppliers would do well to exercise the power they have to honour
existing agreements to the extent possible, for instance by:

  • Agreeing to alternative work methods,
    delayed delivery and rescheduling of work
  • Continuing to pay contractors for
    monthly services – partially if need be if the scope of work has to be adjusted
  • Not delay payments – suppliers are
    likely more sensitive to cash flow constraints than large business.

It isn’t
necessary in times like these to be a corporate bully by unilaterally and
unequivocally pursuing your legal Force Majeure right. Consult with those
exposed, be reasonable, perhaps agree to share some of the pain, see if you can
work something out. This crisis will end. It is not in anyone’s interest to
come back to an obliterated supply chain when it does.

* Nick
Rockey and Matthew le Cordeur are from Trialogue, a consultancy that focuses on corporate
responsibility issues, as well as sustainability and integrated reporting. Views expressed are their own. 

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