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Responding to supply chain disruptions
Although prevention and being prepared go a long way toward ensuring supply chain continuity, disruptions can still occur. Creating an incident response plan will allow you to effectively manage your business's immediate response if your supply chain is disrupted.
It's critical to have a plan in place to deal with supply chain interruptions if and when they occur. In general, the longer it takes to restore supply, the greater the costs to your business. These costs can include:
- interrupted stream of revenue
- lost revenue from customers switching to competitors
- overall customer dissatisfaction
- damaged business reputation
- penalty payments for contractual non-performance clauses.
As well as reducing the potential costs to your business, an incident response plan also has several other benefits:
- It gives you a better understanding of your supply chain processes.
- It provides a course of action when a supply interruption occurs.
- It allows any knowledgeable person in your business to take immediate action to restore supply if key staff are unavailable.
Your incident response plan should:
- identify actions for shortening the duration of a disruption, thereby minimising its impact on your business
- identify resources — human, financial and material — that will be required to carry out these activities
- indicate what triggers will implement the plan (e.g. once stock decreases to a certain level you will implement the plan).