Creating and maintaining smooth and reliable supply chain processes can avoid the kind of disruptions that turn small problems into big crises. Sarah K. Rathke, a partner in the Cleveland office of international law firm Squire Patton Boggs, is co-author with Rosemary Coates of “Legal Blacksmith: How to Avoid and Defend Supply Chain Disputes.” She offers 6 suggestions for avoiding supply-chain crises.
1. Know your risk areas. “Have your chief of procurement identify your most important suppliers for each product line; that is, the ones who are least replaceable and would cause the most supply-chain disruption if things went wrong. The more customized the product they offer, the more difficult it is for you to quickly replace it. Develop an emergency plan for each important supplier.”
2. Replace silos with company-wide systems. “Have your procurement chief identify the most problematic supply-chain relationships, and examine the root causes of the trouble. Press your chief to think beyond specific suppliers, product lines and short-term issues, focusing instead on creating a systemic approach. Often minor process modifications can help suppliers bring their products into compliance with your specs and prevent serious problems down the line.”
3. Schedule regular supply-chain briefings. “Meet regularly with your supply-chain chief and make sure you’re being kept up to date on the issues. Weekly meetings are good; you want to hear about issues before they become problems, not after.”
4. Arrange for staff training. “Supply-chain professionals need to keep up with changing trends, technologies and skill sets to do their jobs well. Schedule webinars, and encourage people who are studying for MBAs to consider concentration on the supply chain.”
5. Audit your document trail. “Schedule yearly audits of all your key documents, including contracts, purchase orders, agreement templates and any other documents you use to enter agreements with suppliers.” Update as necessary, soliciting input from lawyers and other trusted advisors.
6. Recruit supply-chain executives for your board. “Having a supply chain executive or professor on your board is always a good idea.” They can help steer you to the right path when making supply-chain decisions.
Today, supply-chain mishaps are not just inconvenient; they can slam a company’s revenue, profitability and—most importantly—its reputation. Many of the worst supply-chain problems you might face can be averted through strategic planning and creation of a series of Plan Bs should Plan A not work out.
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