How to Plan for Success in the Face of Supply Chain Disruption

Wil G. Knibloe, CSCM, and Mike Varney, CPA, CIA
5/21/2020
How to Plan for Success in the Face of Supply Chain Disruption

Whether the cause is uncertain demand, shipping disruptions, nonoperational suppliers, or volatile costs, supply chain disruptions have become standard – and waiting for a near-term return to true “normalcy” is a failing strategy. To succeed, your organization needs a firm understanding of your supply chain capability, clear direction from leadership, strategic alignment among all departments, and decisive action. There’s no playbook on economic reengagement, but your instincts were spot on if you have already taken these actions:

  • Formed an executive steering committee
  • Evaluated current operating ability
  • Found and started managing liquidity
  • Assessed current needs and future demand
  • Realigned your supply chain
  • Executed hands-on supply base management

So, what do you do next? Here are three key strategies for business success in the next two to three months.

Focus on defining your near-future business operations strategy.

1. Focus on defining your near-future business operations strategy.

This is the perfect time to reassess the next two to three months of operations. Use the best information you have from a variety of sources – including calculation tools, available science relating to the current virus, and industry data. Don’t be afraid to ask your clients about their plans to help inform your plans, but also make your own assessments.

Do you create a product like masks, where demand likely will remain high for the foreseeable future? Or maybe you produce something like Plexiglas, which likely saw its peak production in previous months and is now decreasing. Revisit your supply chains’ ability to support this rapidly changing demand and determine what must shift if you need to aggressively increase or decrease production.

Also consider how social distancing might affect your work environment. What kinds of adjustments will you have to make? How will you bring people back to work in the safest possible manner? And how will those arrangements affect your typical production numbers?

2. Take advantage of opportunities to save cash and increase liquidity.

Increasing liquidity is a priority in every industry right now. What used to be your typical moneymakers might change. Look at the new market and see where you can meet demand.

Also consider taking advantage of strategic sourcing to improve your commercial terms. The fact is, it’s a buyer’s market right now. Use that to your advantage.

And while hiring might seem like the furthest thing from your mind, this might be the time to deeply invest in professionals who understand how to build supply chains that balance resilience, responsiveness, economies, and risk.

Take advantage of opportunities to save cash and increase liquidity.
Use what you’ve learned to plan for the future.

3. Use what you’ve learned to plan for the future. 

While most businesses were not prepared for the current supply chain disruptions, you can prepare for the future. The key themes here are visibility, resiliency and continuity. Form a supply-focused business continuity subcommittee that can complete an honest post-mortem of your current supply chain and your response to the current disruption.

Understand your critical components and where those items are in the chain, refresh your supply base segmentation analysis, and complete a targeted risk rating of your supply base. Then, shape your recommendations to align with your executive committee’s implementation plans.

Looking for more information about managing supply chain disruption?
Visit our COVID-19 resource center, and see how we can advise you through supply chain management activities relating to resiliency and strategic sourcing issues.

Contact us

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Wil Knibloe
Principal
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Mike Varney
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