It's the nature of the supply chain professionals to feel a need to have contingency plans for their contingency plans and contingency plans for those as well. Designing and implementing a "tight ship" is more than a matter of pre-planning, however: Eventually, something unexpected will happen and even the best supply chain risk mitigation framework will bend in the wake of questions and uncertainty.
Good mitigation practice isn't necessarily about building a ship that's entirely waterproof, it's about knowing what to do and how quickly to do it when it springs a leak. Here's a few of the ways you can add more efficiency into your backup plans:
How Resilient is Your Supply Chain?
Imagine one of your suppliers is hit by an unexpected issue—a factory fire in their only manufacturing plant or a worker's strike that brings supply to a grinding halt. Do you know what you're going to do next, or is your answer something along the lines of crossing bridges as you come to them?
Supply chain managers that rely on this "iffy" strategies certainly will find themselves regretting it in the wake of a disaster like Hurricane Katrina. If something as landscape-altering as Katrina were to hit part of your supply chain, that bridge might be a little too big to cross expediently or, much like the literal bridges in Louisiana, completely washed out. Determine the longest disruption your company could sustain and compare it to the likely outcome of your response plans—if there's a negative disparity, you're asking for trouble.
Get the Whole Picture
As the University of San Francisco points out in a recent article, relying entirely on sales data for decision-making processes is a short-sighted approach. Any preparations for or responses to disruption should incorporate real time resource levels—output capacity of suppliers, realistic transportation estimates, and so on. It's easy to forget that each segment of a business relies on another when your job focus is naturally on the supply chain or sales figures alone. For the most adaptive, realistic responses and defenses to disruption, departmental heads need to bring their sections' needs to the planning table and determine compromises and data-sharing for each step.
Don't Over-Plan Things Out of Your Control
The Strategic Sourceror recommends that supply chain professionals leave infrastructure worries to the leaders they've elected and the public works employees they pay with taxes from the business. This isn't to say that supply chain risk mitigation shouldn't involve keeping a few private courier's business cards in the rolodex, of course—there's no need to put your faith entirely in non-company work. However, investing a lot of time and effort in an obstacle that is literally out of a manager's control wastes resources that could be used shoring up plans within company walls. Keep any infrastructure-related contingency plans short and sweet, such as brainstorming plans setting up supply chain nodes closer to home, if required in an emergency.
Much like important business decisions, supply chain risk mitigation should:
- Take the entirety of operations into account, whenever possible. Additionally, bear in mind the ripple effects your decisions will create throughout the company.
- Emerge from a team effort to prevent over-extending a department without realizing it.
- Incorporate minimal plans for infrastructure issues that a company cannot affect or repair in any lasting way.
If these three guiding paths are used, your contingency plans will have a much better chance of weathering the various storms of business and supply chain challenges. Remember, those "little leaks" manifesting as issues in your supply chain might seem small as they happen, but if you don't address them quickly, they can, collectively, sink your ship.