Thank you for reading Outsider Innovation's third edition of Outsider Information. Part of Outsider Innovation's mission is to provide our contemporaries and colleagues with the best information so they can make the best decisions.

The content and frequency may shift based on the topics of the day, but it will always be information we think sustainability and innovation leaders in industry should know. In this edition, we discuss supply chain continuity and emergency planning.

Highlights

Know your company's responsibilities during a disruption.
The benefits of supply chain mapping and traceability.
How well do you know your supply chain?
Does your supply chain need redundancy or consolidation?
Where in the world and in what tier are your biggest supply chain risks and what are they? Could they damage your brand, your product or your profit?
Can you comply with evolving legislative landscape?

Supply chain disruptions come in many forms- natural and human disasters, geo-political instability, shifting trade policies, material shortages just to name a few. Today, we're dealing with the various effects from a novel Corona Virus outbreak, the human and economic impacts of which are widespread and easy to see.

An event of this scale is almost impossible to plan a way around, but also underscores the necessity of supply chain continuity planning. In any emergency, the first focus should be on the people the company is responsible for. Just like Ready.Gov recommends for families and individuals, a company needs a plan. One simple way to look out for your people is to have communication tools and protocol in case of an emergency. Automated phone, text, email and website updates, are good ways to help your workforce stay informed. Make sure to plan what types of information are needed in advance so that there's few questions as possible.

Communication is key

From firsthand experience, I can attest to the immense impact to an employee's quality of life that an effective communication system and frequent, clear messaging has. During December of 2017, the area in which I lived was impacted by wildfires. My employer sent weekly updates to their employees, detailing what was happening and what we were to do. Some of my friends were less fortunate, as their employers did not have the same communication tools or plans in place. This left them wondering and waiting, checking in twice each day whether they were to report to their site, who they should contact for new information, and where they could go for support.

Obviously a company should plan to take responsibility for their own employees, but if your company has a diverse, multi-tiered supply chain, how do you know who you're responsible for? First, map your supply chain. Supply chain mapping is the backbone to understanding what impact your company has, where, and how to deal with it. How many tiers does your supply chain have? It's important to dig until you reach the bottom - issues can arise at any level, and chances are unless you know all the parties involved, the responsibility will get passed just deep enough so that you're not able to trace it. Have a plan or statement prepared in advance for your supply chain partners. Doing so can allow them to quickly adapt to a changing scenario, and it will make distributing necessary information easier. Showing consideration for your partners and their employees in a time of emergency is great for improving and maintaining your relationships.

A “missing” piece

I can recall a production hiccup in the supply chain of my supplier's, supplier's, supplier that through sheer coincidence, we had know about months in advance. We weren't aware of this particular partnership, and it unfortunately resulted in months of delays. Had we dug deeper, we would have known the risk and been better prepared with a backup source in time to avoid the issue altogether.

Supply chain mapping is critical for communication, but also allows you to find complimentary skill sets, liabilities or bottleneck. As you find these overlaps, assess whether the supply chain needs redundancy or consolidation. Redundancies are beneficial for critical components in the supply chain or particularly important products, however too much redundancy can limit influence in the supply chain or increase prices on products with lower demand. In the case a product doesn't warrant redundancies, consolidating the supply chain can help establish better relationships with fewer suppliers, allowing for better pricing, service and quality.

Considerations

What does Redundancy look like? In short, it's a backup plan. The complexity of each company's strategy will change based on myriad factors, but it's important to consider the regional distribution of the supply chain, unique skill sets or materials in it and assess where any hot spots or blank spots might exist. If all of a company's manufacturing is in a flood or fire prone region, finding and vetting a backup in a more stable area could be prudent. This principle carries for companies whose manufacturing or raw material comes primarily from a single region - a shift in geopolitical tides or a customs dispute could wreak havoc on their ability to deliver products.

With a complicated supply chain, risks and liabilities can arise from almost anywhere. Know the supply chain and what risks can arise - are they a threat to the quality or delivery of your product, to your brand's reputation, or your employees? Anticipating these risks can help circumvent them and the risks should be factored into redundancy and consolidation planning. Recently the EU has put pressure on Cambodia and companies manufacturing there for the labor practices in the country, and companies manufacturing in northwestern China are facing similar concerns. These developments can put your supply chain at odds with constantly evolving legislative landscape, or with your company's ethics. It's critical to maintaining a company's integrity to find and remedy these issues before a competitor or NGO does.

If Supply Chain Continuity and mapping sound like daunting propositions, consider the risks of not having them. Even going through these exercises for the top 20% of your company's product can substantially reduce risk and improve relationships. If you're interested in these exercises but don't know where to start, send us a note. Outsider Innovation is here to help.

Until the next installment, thanks for reading Outsider Innovation's newsletter, Outsider Information. Stay well.