A discussion of actions that manufacturers must take to shore up their supply chains and make them more resilient to current and future disruptions, with two executives from Chubb: Erik Olsen, vice president and executive property specialist with risk engineering services, and Mike Williams, executive vice president and North American manufacturing industry practice leader.
Manufacturers today are confronting an unprecedented confluence of events that are causing severe supply chain disruption, including COVID-19, more frequent natural disasters, labor shortages and high consumer demand. Making matters even worse is the coming of the peak holiday shopping season. Against that backdrop, manufacturers should be requiring their critical suppliers to have in place formal business-continuity plans that are “practiced, updated and audited” at least annually, Olsen says. Such documents should include emergency preparedness plans for anticipating hazards within their particular regions, along with clear instructions for seamless coordination and execution of those plans.
Businesses should strive to address risk factors over which they have a measure of control, such as building strength and safety. Williams particularly stresses the importance of ensuring strong roofs that can withstand hurricanes and other violent weather events. In addition, they should possess emergency power systems that are well-maintained, and take other measures to protect physical assets.
At the same time, it’s important to diversify both transportation routing and sourcing in order to reduce the impact of an incident that might affect the ability of key suppliers in a given region to maintain production. Ideally, alternatives should be found in distinctly different areas. “Manufacturers need to plan ahead,” Olsen says. “They should conduct scenario analyses to be aware of evolving exposures. Best practice is to determine which inventory is going to take the longest to replace, and plan around that.”
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