- Japanese airbag supplier Takata is expected to announce its bankruptcy in the coming weeks after a year-long legal battle over quality defects in its products that led to 16 deaths and a $1 billion settlement with the U.S. Department of Justice, USA Today reports.
- While bankruptcy suppliers typically devastate buyer partners, Japanese carmakers will be less hard hit due to risk management measures, The Wall Street Journal reported Monday.
- In addition to setting aside funds to address recalls and defects, carmakers like Honda and Nissan sought out or are looking for alternative suppliers to fill the void Takata and its airbags left, according to the Journal.
Takata's bankruptcy, while yet to officially occur, was long foreseen and therefore gave Japanese automakers plenty of time to manage the risk inherent in working with the company.
Bankruptcies often lead to delayed payments and shipments, which could disrupt the automakers' production. In addition, even if the airbag supplier did not go bankrupt, 16 deaths and a U.S. lawsuit significantly damaged the suppliers' brand, and by extension the companies that worked with it.
As a result, it's only natural for the buyers to begin sourcing elsewhere. The Wall Street Journal reports Swedish supplier Autoliv is seeing an increase in business since allegations against Takata began, and expects to deliver 30 million such parts through 2018.
The carmakers are an example of companies with a good risk management policy. Regardless of the length of a supplier relationship, disaster can strike in various forms and hamper a company's ability to continue business as normal. Having a diverse supplier base, a contingency plan and staying updated of events affecting your suppliers can help build resilience.