Supply-Chain Protection

Many companies work on a principle of inventory where necessary goods or services are provided just as they are needed. This method is called "Just in Time" (J.I.T). It's a valid inventory and resource management model that saves space and money under normal operating conditions. Under abnormal conditions, such as a disaster, it may create vulnerabilities to disruption. With some proper planning, you may be able to decrease the likelihood of your business operations being disrupted. However, due to the wide use of JIT inventory practices and heavy reliance our economy has on transportation for goods, it may be impossible to completely eliminate the possibility of disruption.

When considering how to protect your supply lines, think of some of the following concepts:

Diversity-

Look for more than one supplier that you can turn to if your primary one is unable to meet your needs. You may even want to look for one out of state in case your local and regional suppliers are disrupted by a disaster.

Supplier Continuity-

Does your supplier have a business continuity plan? Ask that supplier how they intend to serve you in the event there is a disruption of the local transportation system. Your business continuity planning may have you well-prepared, but if a critical supplier is not, then you are likely to be disrupted, despite your planning.

Third-Party Impacts-

Perhaps both you and your primary supplier have contingency plans to remain operational after a disaster. Is there a third party involved, such as a shipping company? You will want to find out how that company intends to maintain its operations so that they can get the materials from your supplier to you.

Memorandums of Understanding (MoU's)-

If you find yourself in the unfortunate situation of having to replace critical assets after a disaster, understand that you will find yourself in competition with everyone else who needs those same assets. In short, if you need it, chances are, someone else will too. Having an informal agreement or a formalized agreement with a supplier could benefit you. If limited assets or supplies are available, those businesses that have established contracts or agreements (MoU's) beforehand with the supplier will receive priority over those who have not. However, depending on the disaster, some suppliers may not be able to meet your needs or may sell their inventory to the highest bidder, despite having a MoU.

Limited Stockpiling-

If you have a little extra storage space, consider stock-piling those inventory items that are the most critical to your business operations. Usually 3-7 days worth is sufficient.

Resource Pooling (Mutual Aid Agreements) -

Consider entering into an agreement with a friendly competitor that you will share resources between you in the event of a disaster. Just like the MoU's, this is dependant upon the ability and willingness of the other party to provide resources when you need them. If the disaster is regional, the other party may be unable to help you.

No other area of business continuity planning benefits as much from effective pre-disaster planning as does supply chain protection. Also, no other area is so prone to oversight. Beware holding to assumptions and take the time now confirm with your suppliers and any related third parties with regards to your expectations. The absolute worst time to be surprised on supply-chain realities is in the middle of a crisis.