You’re Just One Incident Away From Supply Chain Disruption

Are You Ready? What Will You Tell Your Customers?

Somewhere there’s a snow storm raging, a riot just getting underway or political unrest that will cause a breakdown in communication. All three scenarios could suddenly become your problem if they occur where your supply chain originates, ends or simply passes through.

The potential disruptions that could occur on any given day at any given time are considerable, and most are difficult to predict. Just one large supply chain disruption can lead to an average seven percent drop in share price, according to research from the World Economic Forum. Add to this the negative impact on corporate reputation and you can see why it’s so important to prepare for possible delays.

Supply chain functions should be included in any risk management strategy. This means you should:

  1. Assess how shipments could be disrupted in each geographic area of your supply chain. Prioritize them based on likelihood and economic impact and develop appropriate mitigation plans.
  2. Identify potential supply chain risks during the planning stage of any project. Don’t wait till you’re ready to execute to realize there is a debilitating risk lurking.
  3. Confirm that every supplier you use has their own contingency plans in place. Challenge any weaknesses you see.
  4. Increase the transparency of the entire supply chain. You should be able to quickly and accurately identify where every product is at any point in time.
  5. Establish clear communication between business functions—across departments as well as across office locations. This improves the likelihood that evolving risks can be quickly identified and shared with supply chain managers.
  6. Recognize that even with comprehensive planning, some disruptions cannot be avoided. This is where clear communication, both internal and external, comes into play. Most customers are accepting of delays outside your control. They are not accepting of poor communication or lack of updates. Keep customers in the loop to keep them around. Know what you’ll communicate and how you’ll connect before there is an issue.

Ready to review your own supply chain risks? Here’s a list of potential threats to get you started:

  • Labor unrest and strikes
  • Riots
  • Embargoes
  • Severe weather or natural disasters
  • Power outages
  • Terrorism
  • Political instability
  • Cyber incidents/data breaches
  • Loss of communication
  • Language barriers
  • Equipment or infrastructure failure

Of course, this is just a “starter list,” but it certainly illustrates the complexity of modern supply chains. Are there other risks you’ve encountered that you can share with others? Are there other threats you think should be added to every supply chain manager’s assessment list?