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Summary: The COVID-19 pandemic showed how quickly unexpected events could disrupt global supply chains. The pandemic came as a death blow to the supply chain industry when there was a small buffer room for error and profit margins were squeezing. Here, we will discuss a few essential steps, how businesses can anticipate future challenges and what steps they can take to minimize supply chain disruptions.
Firstly, supply chains include multiple partners working together to achieve a common goal. But it’s challenging to get a 360-degree overview of your partner company’s internal processes and operations and build robust relationships with their decision-makers.
It’s time-consuming to get hold of all the points mentioned above. Still, it will allow you to identify the long chain of component suppliers, which is crucial for building a supply contingency plan. In addition, this exercise will give you the following benefits:
1. Perform a risk assessment test to determine the built-in vulnerabilities in your supply contingency plan. This test will allow you to figure out answers to the following questions:
2. Identify dubious clauses in the contract that allow your suppliers to claim benefits, withhold supply, demand payment, or terminate the agreement during a crisis.
3. Prepare and send a questionnaire to suppliers to identify potential vulnerabilities in the supply contingency plan and address other areas of concern beforehand.
4. Analyze your supply chain forecasts to determine how they might impact mutual agreements.
5. Identify supply chain partners who comply with social, environmental, and corporate governance benchmarks. This step will allow you to build a green supply chain.
Following are a few essential considerations to remember while brainstorming a supply contingency plan:
Critically analyze and review supplier contacts from time to time to ensure you are making full use of all contractual provisions. You can perform this exercise during a crisis or use it as a tool for future planning. The following questions will provide a better picture:
To protect your interests, you must review the standard contract terms, including customer and supplier terms. Here are a few points to include in your supplier terms:
You may consider diversifying your supply chain network if it’s restricted to a particular geographical location or only to a few suppliers. However, diversification may be risky and involve a substantial investment. So, here are a few points you should remember while diversification:
A disaster recovery protocol is an essential part of a supply contingency plan as it ensures business stakeholders understand their responsibilities at the time of crisis. So, you should conduct test runs of the plan to analyze its merits and disadvantages.
Moreover, an effective communication strategy allows all business stakeholders to liaise effectively and find solutions to complex challenges at a moment’s notice. You can also get a 360-degree overview of the ground realities and take immediate action.
At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at firstname.lastname@example.org.
Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.