Strategic plan critical to deal with supply chain distruptions

Making sure that everything arrives at the right place and on time is crucial in the fast-paced world of logistics, and now, more than ever, supply chain resilience is vital to both business profitability and reputation. To ensure this, it is in the best interests of all involved that a strategic supply chain management plan is in place so that when a disruption occurs, various steps can be taken to minimise the risk, says Hugh Reimers, managing director of Eikos Risk Applications. “When we assist a client in mitigating their risk profile, we first address the risks associated with disruptions in their supply chain.” According to Reimers, these disruptions can come in various forms but are generally related to labour unrest and political risk, natural disasters, power outages and equipment breakdowns. Once these potential risks have been identified, it is imperative that a comprehensive supply chain risk management programme is implemented that outlines how a business evaluates its suppliers and deals with disruptions in its supply chain. In a report undertaken by the Business Continuity Institute in the wake of the earthquakes in Japan and Christchurch, New Zealand, it was startling to see how the length of time it took supply chains to recover varied so considerably, said Reimers. “While 29% recovered within a week, 24% required up to a month and 41% stated that recovery required between a month and six months. One organisation had yet to fully recover,” he said. When questioned on how these disasters had influenced their supply chain management, 92% of businesses interviewed said their supply chain strategy had been reviewed, and changes already implemented. “In a world of increasing connectivity, it is vital that companies take the time and effort to identify both the physical and non-physical events that drive such disruptions,” said Reimers. Supply chain risk management is complicated, he added. Some events are insurable, others not, and that is why it is so important to select a short-term brokerage that has a thorough understanding of this field, he advises. “A specialised broker will know which questions to ask you, and will be able to proactively identify your supply chain exposures and create sustainable management solutions for these risks.” Risk evaluation questions to ask 1. Have you identified your critical suppliers, and do you have a clear understanding of how their failure to perform would have an impact on your ability to perform? 2. Have you identified your entire supply chain from the raw material level right down to the customer level? 3. Do you have a detailed record of supply chain incidents and the actions you have taken to avoid similar events in the future? 4. And crucially, have you provided adequate risk training to your own supply chain management team? INSERT & CAPTION When we assist a client in mitigating their risk profile, we first address the risks associated with disruptions in their supply chain. – Hugh Reimers