I mentioned this situation in class Thursday night this week in the context of qualitative factors affecting decisions, one of which was the health/reliability of suppliers.  Sara Lee has taken active steps to ensure that their key suppliers remain in business and are able to function efficiently during the economic downturn.  Recognizing that suppliers are key to the success of an enterprise is a relatively new phenomonon since in the past suppliers were looked at in a more adversarial manner, but these days  cooperation is expanding in both directions (suppliers and customers) as people realize the value of strong value chains.

To compensate, the food maker has reached deals with some of its critical suppliers that they can literally take to the bank. For instance, Sara Lee may promise in writing to give certain sow and turkey farmers up to two years’ worth of business in order to encourage those suppliers’ bankers to lend. To be sure, the act isn’t a selfless one: “One supplier can really change not just the availability of your product but the price of that product,” Chappelle told a roomful of finance executives at the CFO Core Concerns conference in Boston today.

Sara Lee Shells Out Sales to Save Suppliers. The food maker may give sow and turkey farmers up to two years’ worth of business to encourage their lenders to loosen credit. By Sarah Johnson – CFO.com. June 17, 2009