New paradigms in supply chain relations and the importance of business networks after the Covid emergency

Covid-19 has been having a strong impact upon the world economy. The emergency, in addition to disrupting daily habits of every single person, has led to the closure of many industrial activities, thus affecting the production and supply capacity of some national and international supply chains.

The importance of this upheaval is related to the peculiarities of the economic cycle.

Globalization and the expansion of international trade have brought about a profound transformation of production chains, leading companies to opt for a model based on production outsourcing.

In other words, companies have allocated phases of their activity to other suppliers, through a process of relocation, thereby achieving considerable economies of scale.

Whereas, on the one hand, this model has reduced costs for companies, on the other hand, it has led to a long and fragmented supply chains, that are all interdependent on each other. These supply chains have proved to be fragile once faced extraordinary and unpredictable events such as the Covid-19 pandemic, which have led to a sudden freeze of the production that affected the entire supply chain.

Hence the need to reassess the importance of using domestic and/or geographically closer sources of supply.

The achievement of these objectives can undoubtedly be more complex in the economic systems that, even before the current crisis, had significant technological and innovative deficits.

This is true for Italian companies, which have been struggling to grow by internal lines and which are more affected in terms of production capacity and market strength, since they are characterized by a structural deficit deriving, principally, from their small size. This considered, the cooperation among companies, in all its possible variations, could be a strategic and revitalizing path for our economy.

In this context, the so-called “network contract” represents a real opportunity to organize and regulate, in cooperation with other companies, the activities and investments management. This agreement allows companies to establish a steady and reliable organized partnership, which is characterized by a wide range of options and relations flexibility. Its features make it particularly suitable for adapting to situations not initially foreseen or unforeseeable when the contract was concluded.

The network contract, introduced in Italian law by Art. 3, par. 4-ter, Decree Law no. 5/2009, is an agreement under which enterprises undertake mutually to cooperate within a joint program, or to exchange information or services of industrial, commercial, technic or technological nature or to jointly carry outactivities falling within the company purpose. The network contract could be considered, in a wide sense, as an associative contract (such as the company agreement, the association contract or any other atypical collaboration agreement pursuant to Art. 1322, par. 2, of Italian Civil Code) and it is characterized, in comparison with the abovementioned similar contracts, by its own, specific and autonomous purpose. The network contract’s purpose is specifically to enhance the innovative capacity and the competitiveness of the participants companies. In short, the network is the instrument that allows small enterprises to combine forces and win the challenge against major companies.

The network contract can be freely negotiated between the parties; in fact, its contents could be extremely variable. Therefore, this kind of contract is perfectly suitable for the abovementioned needs for industrial transformation.

This would allow many companies to both narrow the supply chains, making them less complex and creating links between companies within the same national environment, and to facilitate the establishment of strong partnerships representative of national supply chains, as well as the dialogue with public sector and/or other foreign industrial infrastructures.

Where it is possible to design a strategic plan of cooperation between companies, having clear objectives, a proper organization and structuring of the relationships between companies and of their activities under the contract (tailored to the specific needs and characteristics of the entrepreneurs and the market sector involved) have become fundamental to efficiently face the challenge posed by the spread of Covid-19.

Author: avv. Daniela Zamboni

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