Managing Supplier Risk with Resilience

Continuity plans can help organizations quickly handle supply chain interruptions and return to normal operations.

By Sue Doerfler

Supply management organizations are taking a transformative view of supply chain risk. Rather than just identifying it, assessing it and working to reduce it, they are adding another component: resiliency.

Being resilient means recovering rapidly and effectively from supply chain interruptions and risks that include natural disasters, issues with critical suppliers and unexpected changes or events. Not only are companies setting up their own internal resiliency plans to handle such interruptions, they’re making sure their suppliers have contingency strategies as well.

Supply chain interruptions happen all the time. Some are easier to handle; others are more complex or have more impact. A factory shutdown could disrupt production of a key part. An unexpectedly large order could require increased capacity — as well as an additional supplier or manufacturing facility. A hurricane or other natural disaster may interfere with shipments, meaning parts must be shipped from elsewhere, or put a halt to shipping altogether.

Often, companies are reactive when interruptions occur because they aren’t prepared to handle them. They might not immediately be aware of an issue, and delay in dealing with it. Or they might not be sure of its impact, and spend days or weeks figuring out what it means.

“Interruptions are going to happen every day — and you cannot possibly plan for every single one of them,” says Aaron Parrott, specialist leader in Deloitte Consulting LLP’s supply chain and manufacturing operations practice in Kansas City. “But what you can do is figure out how to quickly respond and get back to normal operation.”

By making resiliency a priority, supply organizations can be prepared for supply risk: They will have options, strategies and solutions at the ready when an interruption occurs. By ensuring their suppliers are equally prepared, they will have critical products and components available when they need them. Their customers will be satisfied. And there will be minimal impact to the bottom line.

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