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ASCM Insights

9 Essential Elements of Supply Chain Continuity Planning

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COVID-19 containment efforts have severely affected supply chains nationwide, creating repercussions for original equipment manufacturers (OEMs) and supply chain managers across numerous industries. The pandemic serves as a reminder of the importance of proactive planning for manufacturing and supply chain continuity. In the grip of any crisis, those who have established thoroughly vetted continuity plans can more effectively sustain operations, maintain quality standards, consistently meet customer project deadlines and be poised to recover quickly.

OEMs tend to ask suppliers and prospective suppliers, as a matter of course, whether they have business and supply chain continuity plans. If the answer is yes, it’s essential for OEM decision-makers to follow up by thoroughly understanding what those plans entail. Otherwise, they risk their own ability to be agile in responding to implications from a crisis. Partners must work together to gain a clear understanding of what continuity plans encompass in order to ensure they cover a variety of potential risks — whether a pandemic, natural disaster, cybersecurity breach or some other devastating event.

Supply chain continuity plans should address, at minimum, nine key areas:

1. During the present pandemic, remote business operations have proven to be paramount. Supplier-partners should be virtualized and have remote work plans and policies in place, be able to explain how they will deploy employees outside of plant locations, and clarify how quickly they can implement these work processes. All personnel should be able to connect remotely to the systems necessary for them to carry out their job responsibilities. Suppliers should be able to detail the technologies they have installed to enable these connections, including ensuring that employees have laptops or other necessary devices, and their plans for supporting higher-than-usual demands on bandwidth.

2. Remote machinery operation allows continued operation and production without constant employee oversight. The supplier-partner also should be able explain how its personnel will address machinery operations that must be done on-site, such as manual loading and unloading of material.

3. A crisis can have greater impact on one location’s ability to operate than others. Therefore, suppliers that have multiple locations offer OEMs increased confidence that production can continue unabated. Ideally, recognizing that geographic areas also can be differently affected, suppliers will have facilities in more than one city.

4. Supplier-partners should be able to provide assurance that they have proper security across physical sites. Security measures should include, among others, fire and intrusion alarms, surveillance technology and/or personnel, as needed, and access control, which includes locks, key cards and device authentication.

5. Suppliers should have redundancies in at least four categories: alternate machinery, preferably at each of its locations; backup production suppliers; plans for supply chain shifts that permit uninterrupted flow of parts and materials; and complementary employee skills, with documented cross-training procedures for critical functions.

6. Cybersecurity is vital, as criminals frequently take advantage of crises to try to steal data or stall targets’ operations. Employees often are a preferred entry point, and the risk of data exposure may increase exponentially when employees work from home. Risk-aware organizations will have in place reliable firewalls, multifactor authentication, intrusion detection and other operating protocols to protect sensitive company and customer data. These businesses also will have implemented security awareness training that minimizes vulnerabilities by teaching employees safe online practices.

7. Recognizing that not every channel will be right for every situation and that some systems may rely on an unavailable internet connection, suppliers should have multiple communication systems in place to connect with customers, suppliers, employees and the community during a crisis. These may include email, phone, texting, signage, its website and social media outlets.

8. OEMs typically keep a close eye on revenue, cash flow and profitability. Given the importance of finances to business operations, they should pay attention to their supplier’s financial stability, as well. Strong financial performance, minimal debt and good lines of credit are indicators that partners will be able to weather a storm.

9. The list above is not comprehensive for every entity. OEMs and supply chain managers should diagnose other areas of risk exposure for their businesses, then research and implement strategies to mitigate them.

COVID-19 has served as a dramatic reminder that actionable business and supply chain continuity plans are critical. Equally vital is to periodically review and update plans as operations shift, new risks are identified, obsolete machinery is replaced and other business changes occur. Ideally, the partners will run annual simulations and checks of internal alert levels to indicate specific actions or procedures personnel would need to execute in a crisis.

To minimize project delays in times of uncertainty, OEMs and supply chain managers are well served to ask their partners for details about their business continuity strategies and request that they address any areas that aren’t buttoned up. When partners work together, they are most likely to develop mutually beneficial continuity plans.

About the Author

Roger Shaw Director of Risk Management, Miller Fabrication Solutions

Roger Shaw is Director of Risk Management at Miller Fabrication Solutions, a strategic supply chain partner offering metal part manufacturing and value-added solutions. He may be contacted through millerfabricationsolutions.com.

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