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How to Spot the Weak Link in Your Supply Chain

Have you taken steps to mitigate the risks that could threaten your vendors' ability to continue providing services to your business?
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Take a look at the vendors and suppliers that work with your business. Do you rely on a power company? Water/sewer authority? Internet service provider? Telephone company? Data backup provider? Insurance agent? Financial advisor? Attorney?

Now consider the barrage of threats that could potentially disrupt the ability of any of those parties to continue providing services for your business: natural disasters, worker strikes, technological failure, terrorism—the list goes on.

Feeling nervous? It might be time to act.

“When we’re talking about supply chain readiness, we’re not talking about going out and making sure you have no risk anywhere in your supply chain—that’s simply not achievable,” said Mark Norton, senior continuity planner at Agility Recovery, during a recent webinar. “Don’t try to have 30 different vendors that can all deliver you coffee. Instead, look at a recovery strategy you can put in place should that supply become disrupted.”

Here are three key steps to identifying the weak links in your supply chain—and making sure you strengthen them before it’s too late.

Get on the same page. The first step is making sure your vendors and suppliers are aware of their risk to begin with. This might involve anything from scheduling a call with your account representative to sending around a quick online survey with questions like:

  • Does your organization have documented recovery plan?
  • Have you completed a formal risk assessment and business impact analysis?
  • Are you comfortable with your preparedness to handle an interruption?
  • Does your recovery plan include options for alternative facilities?
  • When was the last time you tested your recovery plan?

“You don’t know what you don’t know,” said Norton, who suggested focusing on the most critical vendors and suppliers initially. “Push your vendors and suppliers in that direction if they’re not there already. Make it a year-long project—it’s nothing you’re trying to burn through over the next week and a half.”

Scott Teel, marketing director at Agility, agreed it’s important to start small. “You may not get every answer to every question, but you can do some of your own research as well,” he suggested. “Talk with your account representative and say, ‘What would happen if…?’”

Test the waters. Using your organization’s annual disaster test to reach out to vendors and suppliers might elicit “a much more honest and deeper understanding of how they’re going to work with you in a crisis shoulder to shoulder,” Norton said. Try:

  • Conducting assessments of supplier business continuity plans, or requesting self-assessments
  • Conducting onsite or virtual audits
  • Working with suppliers to make improvements on weaknesses
  • Engaging in simulations of business disruptions to test supplier and vendor ability to activate emergency response plans and crisis management

“Business continuity planning isn’t something that should be done alone in a room all by yourself,” Norton said. “This is a conversation—something you can have whether it’s part of your annual test exercise or simply as you bring a new vendor supplier on. Business continuity should be ingrained in your culture.”

“You don’t want it to be adversarial,” Teel added. “You don’t want people to become defensive about their plan. This is a discussion.”

Prevent what’s preventable. Most supply chain disruptions have an element of surprise, especially if they’re associated with a disaster. But you can help reduce risk by picking out the vendors “that carry a little more risk for you and understanding the response they will have,” Norton said.

That means fully identifying the risks associated with your main vendors, recognizing the causes of those risks and estimating the probability of occurrence. From there, you can ask yourself what you can do to reduce your organization’s risk as part of your riskiest relationships. What can you do internally to cover some of those gaps? Do you need to consider a backup vendor or supplier, or perhaps a workaround strategy that isn’t ideal but would serve as a temporary solution that could at least keep the business up and running during the recovery process?

Whatever you need to do, do it today. “It’s not the right time to be exchanging business cards during the time of a disaster,” Teel said. “You don’t want to be making your very first call or email in the midst of a crisis. When it comes to things like finding another supplier, it may be as simple as establishing a line of credit. At least you’ve taken a few proactive steps so when a disaster does occur, you’re not going through a lengthy process when you’re on a very short timeframe.”

Jacquelyn Connelly is IA senior editor.

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Tuesday, June 2, 2020
Agency Operations & Best Practices