|
Emergency plans
are often required where some kind of unforeseen happenings may
not be ruled out While no body can think and plan for Tsunami or
Hurricane Katrina Purchasers without contingency plans may face
embarrassments as it may lead them scrambling for supply and
paying outrageous fees.
Purchasers do learn a lot about contingency planning in the wake
of many unthinkable happenings. The best way to go about it is
not to wait for it to arrive to learn that contingency planning
is something that you should have done it earlier. So what does
that mean for purchasing? A lot. Say, for example, if an
influenza pandemic does occur, supply chains lacking good
contingency plans will result in many companies being driven out
of business. The world has withstood influenza pandemics before
(three times in the 20th century), so your company can indeed
survive with good plans in place. With less prepared competitors
going out of business, your contingency planning may actually
help your company thrive in the long term.
Here are some things to consider in your contingency plan:
|
|
1.Establish strong supplier relationships
now. They will mean more than ever. With reduced workforces
across all industries, supply of critical items will be tight.
Suppliers will have to pick-and-choose to whom they provide
their limited stock. Those buyers with arms-length or
adversarial relationships with their suppliers will struggle.
2.Make sure that your suppliers have
contingency plans. The US government has issued a
Business Pandemic Influenza Planning Checklist at http://tinyurl.com/qlnvt.
Require your critical suppliers to complete and maintain the
checklist and provide it to you on a bi-monthly basis so that
you can assess the strength of your supply chain. |
|
3.Adjust your sourcing strategy. It
is common for purchasers to focus on buying from a single source
in order to get the most highly-leveraged pricing. In times of
crisis, this strategy exposes you to increased risk. You should
have relationships with multiple suppliers - ideally in
dispersed geographical areas - in case a supplier's operations
are brought to a halt by the influenza pandemic.
4.Re-evaluate inventory levels. In
the event of an influenza pandemic, demand for the goods or
services that your organization provides will change. For health
care products, the demand is likely to increase. For luxury
items, the demand is likely to decrease. Discuss with your top
management what kind of strategy you want to have for related
changes in your inventory levels. And if you believe that demand
will rise, don't wait until an outbreak to decide that you need
to purchase more inventory - your suppliers may not have the
inventory nor the staff to handle the increase in demand when
everyone is scrambling for the same items. Conversely, if you
expect demand for your company's products or services to
decline, you don't want to be stuck with tons of inventory. In
that case, you may want to take a lean inventory approach to
ensure that your company has the funds to survive a period of
decreased demand. |
|
|
5.Assess the location of your suppliers.
In the past few years, the increase in global sourcing has
resulted in many buyers dealing with suppliers across the
globe. Low cost countries have been viewed as great places
to source for reducing product cost. But where is bird flu
spreading among humans right now? Yep, low cost countries!
Plus, you have to remember that low cost countries may not
have advanced healthcare to battle pandemic influenza.
Suppliers in these countries may be particularly susceptible
to the consequences of an uncontrolled outbreak.
Furthermore, customs restrictions may tighten in order to
contain the spread of the virus, making it more difficult to
import goods from other countries. You may want to |
|
diversify the location of your suppliers to reduce risk.
6.Revise your Force Majeure clause.
Make sure that your contract contains a Force Majeure clause
that specifically addresses pandemic influenza. You need to be
protected from being committed to any purchase quantity
guarantees if your company is affected by an outbreak.
7.Prioritize department tasks.
Identify critical tasks that must continue to be done in the
wake of an influenza pandemic and less critical tasks that could
be eliminated. Document procedures for all critical tasks. You
don't know which staff members will miss work due to their own
sickness or to care for loved ones, so make sure that all staff
members are trained on the critical tasks. For each staff
member, identify a backup person or two for their work. |
|
