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Vin Gulisano Jun 29, 2023 10:26:01 AM 8 min read

Supply Chain Risk Management Planning: How To Make a Backup Plan

supply-chain-graphicDuring the onset of COVID-19 in 2020, supply chains completely shut down or were greatly disrupted. Even over the next couple of years, many suppliers and distributors struggled to get their business back to what it once was.

Whether you’ve experienced these challenges directly or are a new business with the goal of protecting your people and bottom line from any future occurrence like this, you’ve come to the right place. At G&B Fulfillment, we’ve seen how supply chain disruptions play out firsthand. We were affected ourselves. Luckily, we’ve been able to learn valuable lessons from these hardships and now truly understand the importance of having a supply chain backup plan. Shippers, take note of our supply chain planning advice, below, and be proactive about your business and risk management.

Why are supply chain backup plans important?

First things first. Why should you even have a supply chain backup plan in place? There are several reasons. 

1. It prepares you for the unpredictability of any of the links in the chain. You can’t control every step of the supply chain process, especially with overseas manufacturing and shipping, fluctuating availability of materials and even weather affecting local or regional access to warehousing. Having a backup plan allows you to stay on top of any snags as effectively as possible to keep operations running smoothly. However, not all snags are bad ones. This planning also keeps you ahead for when customer demand rises and you need to keep up with rapid growth.

2. It helps you prioritize customer satisfaction. Ultimately, your goal is to satisfy your customers. Supply chain disruptions happen, but if you’re transparent with your customer about how you’re getting their order back on track, it will build brand loyalty and satisfaction.

3. It allows you to recognize talent and create a specialized team dedicated to planning. Instead of everyone in the organization frenzying to figure out solutions to supply chain issues, have a dedicated team in place that understands potential supply chain scenarios and can clearly communicate when, where and how to pivot. These could be team members who already work for your organization who understand your work culture and operations—and could therefore boost their morale to be appointed to such an important role—or it can be creating new jobs for personnel brought in to look at the big picture of these types of situations.

By implementing a plan with backup suppliers and warehousing partners, you’ll have more options for inventory management, rising order volume and shipping. We recommend staying in frequent communication with your current and backup suppliers in order to maintain a strong, transparent working relationship in good and challenging times.

How to prepare your supply chain backup plan

Everything your supply chain process touches should be considered in planning, from warehouse locations to ports, materials and suppliers. Your team should ask these questions in order to put a thorough backup plan in place and flesh out answers thoughtfully with actionable steps:

  • From experience or from unknown situations that haven’t happened yet, what potential supply chain scenarios could our organization face?
  • Do we have alternate providers of materials/suppliers? If so, when was the last time we communicated with them?
  • Do we have a backup/alternate port?
  • Do we have backup ocean carriers/freight providers?
  • Do we have a backup warehouse free of these potential disruptions? For example, those in Los Angeles may want to consider a backup warehouse in Northern California.
  • Does our backup provider/warehouse have the proper infrastructure to handle our current challenges? What’s their timing like? What are their own backup systems with internet and cloud-based systems? Do they have their own disaster recovery plans?
  • Do our in-house team and backup supplier understand our product and process? Cross-training could be a good tactic to implement for a refresher course.

It’s easier said than done to put a backup plan in place, but being proactive instead of reactive could make all the difference in times of crisis. Create scenario-driven situations for your backup suppliers and see if they can come up with effective solutions for pivoting. It will help you feel more confident in your choice to change direction when needed.

You can also conduct an annual or biannual supply chain audit to go over your backup plan, any recent issues that have arisen, how they were dealt with and what the best way to move forward is. Specialty suppliers may need more frequent audits depending on the product and industry, but in general, suppliers should “pressure test” and revisit their challenges once or twice per year.

See how this toy manufacturer avoided supply chain disruptions.

The risks that come with not having a backup plan

If you’ve already experienced severe supply chain challenges, you understand that not having a backup plan means dealing with:

  • Ports shutting down unexpectedly
  • Unionized work stoppages
  • Unexpected health pandemics
  • Impacted delivery times
  • Fewer materials

Being prepared for bad news is critical to an effective supply chain risk management plan. During the pandemic, G&B Fulfillment overly communicated with our clients to ensure their needs were being met, and we also made our employees feel safe and secure with the compensation they deserved to continue to be motivated to come to work.

In conclusion, it’s essential to remain “supply chain resilient.” This means being flexible, having options and applying critical thinking to your business plans instead of using a “fire drill approach.” If you can withstand challenges, maneuver when needed and look at the big picture of your business instead of the now, you’ll be in great shape for whenever a supply chain issue does arise. 

If you need help managing your services or are seeking a backup warehouse, talk to one of our experts today.

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