1. Develop a Plan
Form a contingency team composed of key supply chain partners, (e.g., from the OEM, manufacture, logistics sides); and identify contingency scenarios:
- Re-examine sourcing partnerships and identify alternatives
- Model the impact of disruptions on your sourcing and inventory strategies
- Identify a core contingency inventory strategy – in what form and quantity across the entire procurement, manufacturing, and distribution network – to be fine-tuned as the need arises
- Develop a list of appropriate immediate and follow-up actions to achieve an optimal outcome for each contingency scenario, and, most important, appoint a point person to take charge of each contingency
2. Create Visibility
It is essential that all networks linking trading partners support end-to-end visibility and that all network partners participate in contingency strategies. In this way you can monitor supplier performance in real-time and address any variances in your risk management system.
3. Build Flexibility
An agile supply chain can help mitigate risks. Look at opportunities to alleviate current supply chain bottlenecks, model alternative transportation network configurations and look for alternative sources of supply.
4. Respond Decisively
Proactively link contingency plans and business objectives; and assure that point people have previously obtained corporate authority and by-in for the rapid execution of your strategy.
5. Continuously Improve the Plan
Continuously update the plan against long-term business objectives as well as changing market conditions, supply constraints, changing demand patterns, and other country-risk scenarios.