In Part 1, we looked at assessing the different risks posed in relation to employees in relation to Business Continuity Plans. In Part 2 we are looking at Supply Chains.
The risks in supply chains revolve primarily around three main areas – the availability of the products/raw materials/service, the supplier remaining in business and logistics – getting the products/raw materials to you.
In relation to the current situation a number of businesses have simply closed their doors for a period of time – this might be because they are facing their own supply chain issues, their employees availability or to be able to work in a safe environment or finances. Other businesses have been affected by panic buying or demand changing and have run out of stock.
As part of your business continuity planning it is important to try and do the following:
Assess the stock that is required – is it appropriate or prudent to have a quantity of certain stock items in reserve?
Assess the suppliers – who are your key suppliers? Are there alternative suppliers or other connections in that supplier’s distribution chain?
Assess the products/materials – are there alternatives that can be used?
Assess the source – If, as there are now travel lock downs, how will that affect import/exports – who are the local suppliers and distributors that you can utilise?
When carrying out due diligence on suppliers it would not be unreasonable to ask them for a copy of their business continuity plans (or a summary of them) so see how well they are prepared to respond to various circumstances.
Assess the delivery mechanisms – are there ways that you could collect if it got desperate, which logistic companies could you use if that became necessary?
Review the contracts – where do you stand contractually? are you released from any exclusivity provisions? Do the minimum purchase requirements fall away or do alternative supplies in the event of non-supply count towards your minimum purchases, watch out for quantity related discounts.
If you would like specific supplier contracts reviewed before you enter into them speak to a member of our Commercial Team about our fixed fee service on 01384 811 811 or click here.
