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You Had One Job! Managing Supplier Breakdowns with Contingency Planning

By Manda Schweitzer-Miller  March 22, 2018

It seems almost too absurd to be true. A tire store without tires, a car dealership without cars, a chicken restaurant without chicken. Or even more alarming, pharmaceutical companies without vital medications and vaccines. And yet, from time to time these stories hit the front-pages leaving consumers stymied and frustrated and organizations scrambling to recover. How does this happen? And how can you prevent it from happening to you?

The number of people, processes and systems involved in delivering goods from point A to point B is expansive. Supply chains are increasingly complex organisms. With the number of variables and stakeholders at play, without the right strategy, vulnerabilities exist around every turn. You can’t always control what happens in the world around you, or the actions of every cog in your extensive network. But you can make plans for how your organization will respond to the unexpected. Supply chain contingency planning is absolutely key to navigate bumps in the road. But if the extent of your contingency plans is to account for natural disasters, you are missing the point. Your contingency plans should span your network and be built upon three key areas: visibility, scenario analysis and rapid response plans.

Visibility

So, how do you start? Creating an end-to-end view of your current supply chain network with a digital model is a good jumping off point. With a complete and comprehensive view of your network, you can pinpoint potential risks in your existing network. For example, are you putting all the heavy lifting on one supplier? What happens should that supplier go offline? Or, is 100% of one SKU moving through one DC? Would splitting distribution to another location decrease the risk potential?

Scenario Analysis

With the potential risks identified, what different strategies could help you overcome them? Instead of aiming blindly, applying scenario analysis can enable you to test out new approaches prior to real-world implementation. On paper, splitting distribution may seem like a great approach, but how would that impact costs? Transportation routes? By combining your own data and KPIs with powerful optimization and analytics, you can determine the best approach for your collective goals to ensure that solving one problem isn’t creating another.

Rapid Response

So now you know where the risks lie and have identified a strategy to overcome them, but having a strategy is only effective if you’re armed to put it in practice. Do you have the right people, processes and technology to support these efforts? Have these contingency plans been communicated across the organization? Are the right processes in place to trigger this shift should an unforeseen event require to launch a new approach? And how quickly can you make such a shift?

Having a full view of your network, knowing what other strategies can help you navigate risks and being prepared to deploy them quickly should the occasion can help you keep your operations moving forward and your customers happy in the face of unforeseen events.

Learn how HP is leveraging supply chain optimization technology to overcome potential risks.