News, Insights and Best Practices for Manufacturing in Mexico

Supply chain contingency plans

26 Sep 2014

Category: Logistics Management, Manufacturing in Mexico

Even with the help of offshore shelters, supply chain disruptions are inevitable. Whether they result from natural disaster or a loss of data, they can wreak havoc in an otherwise seamless operating system. While nearshoring in Mexico is a great way to help reduce delivery lead times and better prepare for any such disruptions, it is always a good idea to have a contingency plan set up just in case.

First steps 
In essence, a contingency plan will prepare you for when one company in your supply chain is in trouble. A good contingency plan will not only allow a you to successfully react to any problems, but it will also allow you to be proactive and minimize a percentage of potential loss before it even occurs. Including one as a mandatory part of your standard operating procedure will ensure that it is fully prepared and effective when an unforeseeable crisis comes along. 

Start your company's contingency plan by identifying different types of disruptions and give them action levels based on potential impact. Storms and holidays are events that can often be anticipated, but other crises such as data loss and personnel problems give no warning. An important component of the risk assessment process is also listing and addressing all critical business operations, as this lays the framework for developing a more action-based plan. For even more coverage in the event of crisis, consider developing contingency plan partnerships with the rest of your supply chain.

Implementing your contingency plan
Two often overlooked steps of effective plans are communication and practice. All employees should be debriefed on what must be done in the event of a crisis, as limiting the knowledge to select staff will make implementing necessary steps incredibly difficult. Executing disaster drills is crucial for ensuring that the contingency plan is viable as well; just because Plan B looks good on paper does not necessarily mean that it will work when disaster really strikes. 

Many precautions can be built into your standard operations ahead of time as well, such as backing up data offsite or ordering raw materials from several suppliers instead of just one. Not only will planning ahead in this way position you for more competitive manufacturing, but it will also mitigate some of the effects of today's incredibly lean supply chains. 


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