Assuring supply against the threat of disruption

Supply chains are subject to disruption all the time. This can be as the result of unexpected and tragic disasters like the devastating explosion in the Chinese port of Tianjin, environmental disruption like the volcanic ash cloud of 2010 or everyday problems such as late deliveries and raw material shortages. Such issues often throw supply chains into chaos and companies into a spin as they frantically try and assess impact, take mitigating action and keep their business on track. Throughout it all there is cost to the business.

All businesses plan for such problems. However, an assurance of supply strategy can only help companies so far through a challenge. Each incident has its own characteristics and no matter how much preparation may have been done, many companies still find themselves frantically sifting through paperwork, tracking down spreadsheets and contacting suppliers individually to sort out a way forward.

The most effective mitigation against supply chain disruption is to have in place a management system and processes that allow the business to be agile, transparent and collaborative in its dealings with trading partners and service providers. Through a cloud platform a company can handle supply chain disasters by executing its plan with the help of others on the network.

Connected and informed networks

The most connected and informed networks stand to lose the least from disruption and cloud technology optimises the way the network functions. Supply chains today are global; by sharing the maximum amount of data in real-time, trading partners have the advantage of taking action quickly on the latest information.  

Companies should make decisions on who is in their supply chain network with assurance in mind. The time of procurement is the right time to consider how a partner would handle a disaster situation, how prepared they are themselves and how they would work with others in the supply chain during a crisis. Detailed ‘what-if’ scenario planning may rule out potential providers at the assessment stage.  

Throughout a trading relationship, performance should also be continually assessed and any action that is needed to better equip each link in the chain should be taken. Disruptions are unavoidable – but the operational and financial havoc wreaked by them needn’t be.

No excuse for a lack of planning

The impact of a disrupted supply chain is minimised through the sharing of data and the rapid execution of action appropriate to the unique challenges of the individual situation, but there’s still no excuse for not planning and preparing. Companies need to share their plans with their trading partners so that all contingencies are built upon the collective knowledge and commitment of the supply chain. The planning process should include an environmental assessment and action plan to address any possible threats before a disaster strikes.

Globalisation and the concept of a lean supply chain exposes companies to more risk than ever from major disasters, so businesses are searching for the most effective way of planning for, and acting on, problems when they arise. In the face of the financial turmoil in Greece, businesses will have assessed the potential impact and possibly looked to alternative sources to minimise any risk to their business operations.

When disaster strikes, strength in supplier networks helps businesses take action. Companies can make technology work for them in dealing with the challenges that natural disasters, extreme weather, political conflict or import/export restrictions place on those in the supply chain business. The best prepared companies with collaborative and agile trading networks will be the most resilient to risk.