Supply Chain Disaster Planning: Mapping Risk and Building in Redundancy
Author's note: This is the third in a series of blog posts that examines key considerations for supply chain disaster planning.
When it comes to supply chain disaster planning, important first steps are to confirm your critical suppliers' disaster recovery plans and verify insurance. Once you know how prepared your suppliers are, you can create a more effective contingency plan for your business by assessing risks and determining where you may need to build redundancy or other measures into the supply chain.
Seeing Potential Chain Reactions
Depending on how important a vendor is to your organization, problems at their site can quickly lead to business complications. That's why it's critical to create a map of your vendor risk landscape and determine how an event at a particular vendor site could impact your business. Your understanding of vendors’ disaster recovery plans will give you a better sense for the extent of interruption they could face, based on most likely events or scenarios and then plan accordingly. Moreover, you can prioritize your planning based on the criticality of each vendor to your business and likelihood of different types of disasters. The types of key questions that need to be addressed with your vendor map include:
- How important is what they provide to our business continuity?
If the vendor is in a disaster, how much time could pass before our business is directly impacted?
- What would the impact be in the near, mid and long term?
- What steps could we take to minimize the disruption to our business, should the unfortunate happen?
- If necessary, do we have a good backup resource we can count on?
- Do our most critical vendors have a redundancy plan?
The Case for Redundancy
The “backup resource” question above is often a very important because your only good option may be quickly pivoting to another provider. And the more prepared you are to pivot, the easier and faster it will be. For example, it would be ideal if the supplier were in a different region and you already had a relationship in place so you don’t have to waste valuable time evaluating the supplier before placing a critical order. If all of the suppliers for a particular good or resource are in a particular region, or there are very few of them, then you can consider other contingency options.
Don’t be a Victim of Hindsight
When you are already busy with a long to do list, it can be hard to think about less tangible tasks like supply chain disaster planning. But whether or not your suppliers are in risky areas, Mother Nature and political events cripple or stop business as usual with surprising regularity across the country and around the world. And depending on the number of suppliers you work with, it’s likely just a matter of time before your business is impacted. Make sure you are ready.