Risk management meeting
Whether you’re a supplier, retailer, or manufacturer, it’s time to critically assess your risk management plan.

Anytime we encounter events like volcanos, hurricanes, earthquakes and even pandemics like COVID-19, there’s a moment of pause. For many, it’s in our nature to want to assess the situation, gather information and then take decisive actions. However, if that pause turns into more of a wait and see what happens next, there can be costly implications to your business. It can also negatively impact your customers and employees. But as many have come to realize since COVID-19 impacted the world only a few short months ago, this is a defining moment for many leaders and companies.

The Next Best Thing to a Crystal Ball

Even when you have somewhat of a heads up, like with a hurricane, the warning signs may not be enough for you to adequately prepare. In many other cases, you can’t predict when events will happen or how things will unfold afterwards. They just…happen. But before they do, it’s important for leaders to get together and address these questions:

  • How will this impact our employees?
  • What effects will this have on our operations?
  • How can I minimize the impact on our customers?

While you can’t foresee events like COVID-19, you can plan and prepare in number of proactive ways. The pandemic is forcing many organizations to develop and enact risk management policies and procedures. For some, this means dusting off your disaster recovery and crisis communications plans, and for others, this may mean starting from the ground up with a risk mitigation strategy. It all cases, the benefits of taking a “Plan and Prepare” approach will get you through times like this and protect your brand’s reputation.

5 Tactics to Plan and Prepare

Information is rapidly changing from day to day, but it’s becoming increasingly clear that risk mitigation helps reduce the probability of a negative impact to your business. This is more than just a “nice to have;” it’s a “must-have” for responsible business operations.

Whether you’re a supplier, retailer, or manufacturer, take this opportunity to critically assess your risk management strategy and adopt scenario planning. Work with all the key functions in your business, from your operations teams, to IT as well as other functions like HR, finance and marketing.

Expect the unexpected and plan for it. Here are five tactics you should focus on to manage risk and mitigate disaster now and in the future.

1. Keep Your Infrastructure Up to Date: Outdated technologies can be found throughout many industries, including the retail and fuel supply chains. It’s important to have a sound Cloud strategy for remote management and operations when implementing a risk plan. Having a cloud-based ERP system enables a company to respond and react in real-time to any disruptions.

2. Inspect What You Expect: Visibility is key, and with the right technologies in place, you should have the ability to track corrective actions and changes to your supply chain. If you expect repeated corrective actions to reduce your risk or mitigate impact, make sure you are continuously monitoring the changes, so you can course correct along the way. Tracking performance is also a good way to be proactive to see if underlying issues may be heating up. Risk management modules will enable you to define and prioritize each risk.

3. Ensure Safety Stock Levels Are Adequate: Consider the possibility of demand and supply uncertainty. With a safety stock, a company can reduce the probability of inventory shortage to an acceptable level and continue to be responsive to its customers. Having a reserve safety stock allows you to plan for any crisis that might hit.

4. Mitigate Critical Dependencies: Working with a single supplier or carrier can be risky. If you have a link in your supply chain that can’t easily be replaced or augmented, you’re probably lacking the necessary backup plans to keep operations running smoothly. If you have a network of suppliers and carriers and the technology to track their orders and manage those accounts, you’re in a much better position to navigate supply and demand uncertainty. At the same time, you’ll be able to maintain a positive customer experience and build customer loyalty, even during a crisis.

5. The Importance of Safety Lead Time in Your SLAs: In dealing with uncertainty, companies often add a safety lead time to the actual cycle time because there are delays in manufacturing and materials, shipping, transportation and delivery. This can be due to the inability to move goods and services, a lack of workers, or a variety of other things.

Preparedness and Planning Go Hand-in-Hand

No one said it better than Benjamin Franklin: “By failing to prepare you are preparing to fail.” Consider the importance of backup planning to ensure business continuity in the event of any departure from the norm. In addition to helping you navigate through unexpected disruptions, it can also speed the return to normal, or at least stabilize business operations. A plan should always include working with the leaders throughout your company, your most trusted vendors and supply chain partners to ensure they understand their role for a successful execution.

Don’t watch and wait to see what happens next; make a plan so you can be more prepared.

Did You Know: Your Source for PDI News provided by PDI, the leader in enterprise management software for the convenience retail and petroleum wholesale markets.