Why Contingency Planning is Vital to Your Supply Chain

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

There has been no shortage of natural disasters across the globe in the last several months. Here in the US, we've felt the full force of Mother Nature's wrath since January -- from historic winter snowstorms to the horrific damages of tornadoes in the Southeast to flooding along the Mississippi River. These events have disrupted the supply chains of thousands of American companies.

I can't stress enough how important it is to factor contingency planning into your supplier and transportation management strategy. It may be impossible to know what's going to happen tomorrow, but it's entirely possible to minimize the impact of a disastrous or unplanned event on your supply chain operations.

A couple of months ago, in a previous post, I shared tips on how to plan for the unthinkable. Those tips -- including increasing supplier diversity, preparing for transportation mode flexibility and creating contingency planning for internal threats -- are worth a revisit.

Today's companies are more vulnerable to the impact of supply chain operations than many of us would like to think. While some businesses have felt a pickup in demand across the past quarter and a half, no company can afford the risk of complacency. In the last two weeks, the dollar has hit an all-time low, while economists have expressed grave concern about the country's economic situation. For some companies, any improvements in revenues and profits could be easily negated by a major unplanned event.

I'm always interested to hear from Spend Matters readers. How important is supply chain contingency planning in your organization? As supplier and procurement management professionals, how are you involved in these efforts?

-- John Haber, EVP of Transportation, NPI

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