3 Ways to Reduce your Exposure to Disasters in your Supply Chain

Imagine this. You’re driving to work one morning, on the way to your textile business, when you hear on the radio that there’s been a natural disaster in Bangladesh. A massive flood has caused considerable material damage and disrupted the lives of millions.

You pull over and call your supplier in Bangladesh. Luckily you manage to get through. But there’s bad news for you. Overnight, your textile supply has been reduced to just 10% of what you need. Your large order from your supplier cannot be fulfilled because the warehouse of their supplier is flooded, along with a 50 kilometre stretch of road that connects your supplier to the nearest port.

This situation shouldn’t require a stretch of the imagination. In Asia, in 2015 alone, floods, fires and earthquakes caused material losses amounting to an estimated $35.5 billion. 

Without having planned for this scenario, the enormity of the problem, and the work involved in overcoming it, hits you. During the next few days you try to figure out to how to buy yourself some time so you can focus on seeking an alternative supplier. But suppliers are already putting their prices up exponentially. You’re spending all your time juggling phone calls between alternate suppliers, your insurance company, and customers wanting to know what’s going on. You haven’t even had time to consider the impact on your reputation, and on new business, once prospects hear about the problem.

Whilst your business may have nothing to do with textile industry, you will certainly have some form of dependency on external suppliers.

Here are three tips for reducing your exposure to mishaps in your supply chain…

 1. Pre-establish alternative providers

Ensure your Business Continuity Plan (BCP) contains provisions in case of a disruption in your supply chain, and an alternate supplier agreed prior to the event.

Even if having two regular, ongoing suppliers (instead of one) causes higher overall prices and slightly reduces your usual profit margin, this strategy could ensure the continued operation of your business. In the event that one supplier is out of action, you can significantly reduce the time to switch suppliers, honour your existing customer commitments and maintain their trust.

2. Build a close relationship with your suppliers

In order to have full confidence in your Business Continuity Plan, strengthen your relationship with your key suppliers.

We all know that business relationships rarely go beyond the exchange of emails or the occasional phone call. But by exchanging more information with your suppliers, and collaborating more closely with them, you will be able to improve the reliability of your supply chain.

Discussing continuity with your suppliers, and understanding their BCPs, will enable you to get an improved understanding of all the factors that can affect your business. It will expand your awareness of risks and your true capability of responding to extraordinary events.

In addition, include your suppliers in your periodic disaster simulations. In this way you will be able to identify gaps in your Business Continuity Plan before those gaps cause major problems when an actual incident occurs.

3. Pre-establish an alternative communication plan

Establish multiple channels of communication with your suppliers during ‘business as usual’. This will provide you with confidence in a smooth flow of communication in times of crisis.

In the case of internet or telephony failure, alternate contact methods for key people can be used quickly. A mobile phone number, a personal email address, a Whatsapp contact, a Yammer group, a VOIP solution or a closed Facebook group can become your lifeline during an interruption to more traditional forms of communication.

These options are inexpensive and therefore feasible for small and medium-sized organizations to put in place. But the time to establish these alternate forms of communication is now, before you need them. When it really ‘hits the fan’, you may be clinging to any form of communication, including smoke signals!

These are just three ways in which an up-to-date Business Continuity Plan can protect your business against disasters and ensure you’re prepared to deal with the unexpected when you least expect it.

If you want your BCP to work when you need it most, contact us at www.businessasusual.net.au.

And if you’re keen on training, you can also have a look at our upcoming courses in Business Continuity, Risk, Information Security and Supply Chain Security Management (incl ISO22301, ISO31000, ISO27001& ISO28000 certification exams).

Browse our upcoming Training & Events

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