Supply Disruptions Don't Have To Be Fatal
PurchTips edition #176
By Charles Dominick, SPSM, SPSM2, SPSM3
Are You Prepared For A Critical Supply Disruption?
Managing supply risk has never been more important. Natural disasters, labor disputes, and bankruptcy can all cause supply disruptions which are expensive to your organization. Being caught unaware and unprepared by a critical supply disruption is not good for your company or your career. This plan for developing foolproof contingency plans will help you prepare for the worst.
Develop "What If?" Scenarios Proprietary and single source supply items pose a risk to your organization. For each of these items, create a simulation that models a real-life event that could cause asupply disruption.
Document Your Contingency Plan No commodity plan is complete without a plan for a supply disruption. Embedding vendor risk management into your strategic sourcing and vendor add processes will help identify high risk suppliers that warrant a formal contingency plan. Use the knowledge of potential alternative sources of supply gained during your sourcing process to ease the creation of the contingency plan.
Practice Your Response Contingency plans that sit on the shelf unread are of limited use. Use surprise drills to practice your response to potential disruptions. The plan you put in place last year may no longer be viable because of changes in the supply market.
Measure The Results Measure the results of your contingency plan and determine how long it will take you to bring a new supplier online. Calculate how much the disruption and recovery will cost your company in increased supply costs, lost orders and potential damage to your company's reputation.
So your contingency plan looks like it will work; but is it the best solution? Evaluate the results you measured and if they are not acceptable, review and revise your plans. The moment of a real supply disruption is the wrong time to try your contingency plan for the first time.
Do You Want a More Rewarding Procurement Career?
Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.
Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM® Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!
Need Better Performance From Your Procurement Team?
Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.
You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.
Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.
Are You Getting The Most Out of Your NLPA Membership?
Members of the NLPA get more than just articles like this by email. As a member, you also get access to:
- The Procurement Training & Certification Starter Kit
- The latest Purchasing & Supply Management Salaries Report
- Leading-Edge Supply Management™ magazine
- Members-only webinars 10x per year
- And more!
If you haven't been taking advantage of these benefits, why not log in and start now?
Copyright 2009. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing.
Click here to request republishing permission.