Supply continuity planning

What continuity planning covers

Supply continuity planning is the work of making sure a part keeps arriving when something goes wrong. The event may be inside the supplier, such as a fire or a machine failure, or outside it, such as a port closure, an export restriction, a power cut or a currency crisis. The plan describes what you will do, who decides and how long recovery takes.

It is not the same as a business continuity plan for your own site, and it is not a supplier audit. It is a part level view of exposure, tied to the production schedule and the customer commitments behind it. A plan that covers every part equally is not a plan. It is a list.

The output should be short enough to use in a real event: a ranked list of exposures, the mitigation already in place, the trigger for action and the recovery time if the mitigation is not enough.

Map the exposure first

Start with the bill of materials and the production schedule. For each part, record the supplier, the site, the lead time, the annual spend, the number of qualified alternatives and the tooling ownership. Then mark the parts where one failure would stop a line or breach a customer commitment.

Look beyond the tier one supplier. A single source at tier two, a single plating line, a single heat treatment furnace or a single tool can be the real point of failure. Ask the supplier for the process route and identify the steps that only one site can perform.

Rank the exposures by the time to recover and the impact of a stop. A part with a two week recovery and a large buffer is less urgent than a part with a twelve week recovery and no alternative. The ranking is what drives the spend.

• Single site, single machine or single special process
• Single tool with no validated duplicate
• Long lead time with no qualified alternative
• Material or sub-supplier concentration in one region
• A route with one port, one carrier or one customs entry point
• A supplier with financial or capacity stress

Second site, second supplier or buffer stock

A second site within the same supplier is often the cheapest form of redundancy, because the drawings, the quality system and the process are already approved. It only works if the second site has the same process and can be qualified on the same tool or an identical one.

A second supplier gives more independence, but costs more to qualify and may produce a slightly different part. It is the right choice when the risk is concentrated in one company rather than one building.

Buffer stock is the fastest mitigation and the least strategic. It buys time while another option is developed, but it ties up cash, occupies space and expires. Use it as a bridge with a defined review date, not as a permanent substitute for a second source.

Sizing buffer stock

A buffer is not a guess. It should cover the time to detect a disruption, the time to decide, the time to activate the alternative and the time for the alternative to deliver. Add the normal demand variation over that period.

For illustration, if detection takes one week, the decision takes two days, the alternative needs eight weeks to deliver and demand varies by ten percent, the buffer needs to cover roughly nine to ten weeks of average demand plus the variation. That is a large commitment, which is why the recovery time matters more than the buffer size.

Review the buffer when the recovery time changes. A second source that cuts recovery from ten weeks to three weeks should cut the buffer, and the cash released is part of the return on the qualification spend.

Set the triggers

A trigger is an observable event that starts a response. It should be specific enough that two people would agree it has happened. Vague triggers such as a supplier looking stressed are not usable in a real event.

Each trigger needs an owner, an action and a review point. The owner is the person who decides whether to escalate, not the person who notices. The action should be the first step of the plan, not the whole plan.

• A shipment is more than five working days late without a confirmed new date
• A supplier misses two consecutive promised dates
• A quality lot is rejected and the supplier cannot confirm containment within two days
• A public event affects the supplier's region, port or raw material
• A supplier signals a capacity, cash or ownership change
• A tool reaches the end of its planned life without a replacement

Test the plan

A plan that has never been used is a hypothesis. Run a tabletop exercise once a year for the top exposures. Give the team a scenario, such as a fire at the primary site, and walk through detection, decision, activation and recovery.

The exercise usually reveals that the contact list is out of date, the alternative supplier has no current drawing, or the buffer is smaller than the plan assumes. Those are cheap findings in a meeting and expensive findings in a crisis.

Record the actions and close them. A tabletop exercise that produces a report but no change is a rehearsal for the same failure.

Keep the plan current

Continuity planning is not a one-off project. Suppliers change, tooling wears, routes shift and volumes move. Put the plan on the same review cycle as the supplier scorecard and update it when a drawing, a site or a source changes.

Assign an owner for the plan as a whole and an owner for each critical part. Review the top exposures at the quarterly business review, with the recovery time and the mitigation status on one page.

The measure of a good plan is not how long the document is. It is how quickly the team can answer three questions: what would stop us, what would we do, and who decides. If those answers are clear, the plan will work when it is needed.

Keep the plan where the team can reach it during an incident. A file on a shared drive that nobody can find at eight in the evening is no better than no plan. Print the contact list, or store it where it can be opened without a network connection.