Could your company survive a supply chain problem during a pandemic?

While North America has not entered officially entered the flu season, there is much that needs to be considered by companies concerning their supply chain. When a pandemic strikes, it will be too late to start to investigate the areas of the supply chain that could impact your business, even if your staff does not become sick.

Have you looked closely at you supply chain? Do you know what material each company provides and the percentage of your raw materials that are supplied by each member of your supply chain?

If you find that a significant portion of your materials come from 1 or 2 suppliers then you may have a problem if these suppliers are impacted by a pandemic flu. You need to also identify how close these suppliers are to each other. If they are too close, they could both be affected by a regional quarantine.

You may be thinking that you could easily switch to another supplier if your primary supplier is shut down. This may not be possible. You do not know what percentage of the supplier’s production capacity is used to supply your raw material. If you are taking 30 to 40% of any one supplier’s capacity and other suppliers are operating at near capacity, then they will not have excess capacity to accept your order. Also, how long would it take to find negotiate and accept a new supplier into your supply chain? Would this new supplier accept that once your original supplier was back in production you would move your orders back to him?

So who in your supply chain is the critical supplier? Can you diversify part of you requirements to another supplier in another region? Do your agreements with your suppliers have the correct wording to ensure sufficient supplies during a disruption to the supplier’s work place?

Do your suppliers have a pandemic response plan? Do you?

Some research and checking now could save your company in the future.

Business Continuity Planning in this Economic Cycle

Is business continuity planning something that you need to do during an economic downturn? Or is this a "nice to have" that can be put on the back-burner and looked at when the economy picks-up?

I am going to argue that now is the time you should be developing and implementing a full business continuity plan.

Many companies cut back on their marketing and spending during tough economic times. The same is true for those projects that they know they need to complete but they have always had other projects with a higher priority to take care of first. Business Continuity Planning is one of those projects. As many marketing people will tell you, during tough economic times, you should increase your marketing, not cut back. People still need to know you are in business. Companies still need to buy your services; they need to find you.

So why should you consider developing a Business Continuity Plan now?

I suggest you take a look at your supply chain. Do you have one or two main suppliers of your raw material? Do you have one or two customers that provide over 50% of your revenues? What would happen if any one of these companies went out of business? Could your business survive?

A Business Continuity Plan is not a program that can or should be deferred until the "time is right". The only right time is now to begin developing and implementing a plan.

Disasters happen at the worse possible time. They do not wait until you or your executives say that they can respond to the emergency or disaster event.

My advice is to start your planning now. When everyone else is experiencing problems, you will be able to know that you have thought through your business' primary activities and will know how to respond effectively and efficiently to any emergency event.

Could your business survive a supply chain interruption?

Businesses of all sizes have a supply chain that they rely on for the successful continuation of their business. For some companies, the supply chain keeps their production line operating by providing just in time delivery of component parts, pick-up of finished parts and off-site storage or parts and materials. For others, their supply chain may not be as obvious to the business. For companies that rely on partners or other businesses to provide information or deliverables that the company uses to produce the final design or report, these providers are part of the company’s supply chain.

Does your company outsource the provisioning of services, such as finance, Human Resources or auditing? These could also be considered part of your supply chain. Some of the companies providing these services may be smaller and less resilient to a disruption to their business.

In order to manage the risks to your company from your supply chain, you need to understand your organization’s activities and processes.

· The critical functions and activities should be identified.

· The impact to the company that a loss of a supplier may have.

· The risks that could impact the supplier.

Once all of this information has been gathered, then you can start to mitigate the risks to your business that could occur due to a supply chain problem.

The loss of a supplier is a major risk today as more business functions are outsourced. It is necessary to validate the supplier’s recovery capability before committing all of your activities to any one supplier.