How to manage supply chain disruption


COVID-19 has caused huge disruptions to supply chains across the world. 94% of the Fortune 1000 have already had their supply chains negatively impacted due to Coronavirus, resulting in shortages of key goods, which has ground economic productivity to a halt.

Pandemic or not, it’s key for every business to have a supply chain risk strategy to mitigate the negative effects of worldwide events, only then can an organisation be prepared for disaster.


Prepare for the known risks 

There are some supply chain and business disruptions that can be anticipated, and that makes it easier to manage this risk. A sound supplier on-boarding process for example, will help businesses to analyse providers’ finances helping them to identify potential signs of future insolvency. These insights allow businesses to forward plan and find a different supplier if needed before disaster occurs.


While anticipated, no business should be complacent about known risks. Here is how to manage them:

  • Identify and document known risks: By mapping out and assessing each aspect of the supply chain, organisations can detail where the risks lie. Once identified, businesses should put them onto a risk register and monitor them on a regular basis so that they can monitor issues before they escalate.

  • Build a supply chain risk management framework: The risk register should include scores that categorise the seriousness of each challenge. Scores should be determined by the impact the risk has on the business, the likelihood of it happening, and the organisation’s preparedness and ability to respond. Only then can the business understand the severity of each risk.

  • Keep an eye on the risks: Technology can ensure that businesses don’t lose sight of supply chain dangers. There are tools available that identify and track crucial elements of supply chain risk and send alerts, allowing users to periodically check in on the status of them.

  • Make people accountable: Setting up a risk monitoring task force, where employees represent different parts of the supply chain and constantly monitor them, will help businesses keep their eye on developing situations. Department heads should act as risk owners, giving them responsibility to assess and report on each of them.


Don’t forget about the unknown risks

Unknown risks are much harder to predict, quantify or integrate into a contingency plan, since it’s often difficult to anticipate their impact. But there are ways that businesses can mitigate any unexpected supply chain challenges that come their way.

A culture of openness within the procurement team and the wider organisation will encourage staff to share discoveries, enabling the whole team to identify and mitigate unknown risks early on. Employees should feel comfortable reporting these adverse events and working collaboratively to resolve problems. If employees are encouraged to react quickly and responsively to unknown risks, they’re more likely to nip issues in the bud. Staff should feel empowered to constantly monitor risks that fall into their individual responsibility, and speedily act whenever they detect a future threat.

The COVID-19 crisis shows that it’s hard to know what’s round the corner. Supply chain disruption doesn’t have to be as destructive as a global pandemic to cause havoc. Events across the world might feel like they’re too distant to have an effect, but the truth is that anything from an earthquake to a new political leader can have a significant impact on supply chains. With some detailed risk assessment, and preparedness for potential eventualities, businesses can achieve damage limitation.