Preparing for Potential Supply Chain Disruptions

Q: As we start a new year, what can we learn from recent supply chain disruptions, and what best practices can be implemented to stay ahead of potential disruptions?

A: Supply chain disruptions are inevitable. Even a relatively minor issue can have an unexpected chain reaction, leading to long-lasting ripple effects.

Given this reality, one of the most important actions that a business can take is to plan for potential issues. Having a contingency plan enables companies to navigate challenges, whether big or small, more effectively. When developing a plan, consider all pressure points along the supply chain. As disruptions evolve, it’s critical to regularly revisit your plan and think through multiple alternative solutions. Travelers offers a free virtual Supply Chain Pressure Test (short.pfonline.com/SupplyChainTest), which is a great way to get started if you need help.

Over the past five years, we’ve seen firsthand how resilient the supply chain can be when change is embraced. New solutions are emerging to keep operations running and goods moving during everything from storms, fires and cyberattacks to system failures and a global pandemic. For instance, we’ve seen more companies prioritize sourcing materials or products from locations that are closer to them geographically. The shift toward digital also accelerated during the pandemic and continues to do so. All of this reinforces that maintaining operations is possible through planning and flexibility.

Q: Are there any areas of the supply chain that are sometimes overlooked?

A: While upstream and downstream supply chain risks garner worthy attention, in-plant supply chain risk (people and property) is one area that is often neglected.

Part of shoring up your supply chain includes focusing on the people who help power your organization. This starts with finding qualified talent, which may require new approaches. Onboarding and training are also critical components, especially when you consider that 35% of workplace injuries occur within the first year of employment, according to the 2024 “Travelers Injury Impact Report” (short.pfonline.com/InjuryImpact), an analysis of five years of workers compensation claim data.

It’s not unusual for a manufacturer to have employees who cannot be easily replaced because of their specialized skills or specific knowledge. Consider how an organization could be impacted if these employees leave or are injured, especially given the continued struggle to find workers. Planning for the potential loss of a critical employee can help minimize production disruptions. Establishing and maintaining knowledge transfer programs is one way to ensure continuity.

In-plant risks also include critical equipment, which often can be highly specialized and difficult to replace. In addition to ensuring that equipment receives routine maintenance, have a contingency plan in place for every component, and factor in potentially long lead times to acquire necessary replacement parts. As part of the plan, line up reliable repair contractors. And don’t forget to incorporate employee training on properly and safely servicing and maintaining facility equipment.

When developing a contingency plan for in-house operations, it’s also critical to consider weather-related issues. If a shop is in a region with colder temperatures, the impact of snowy and icy conditions around the property should be considered. Make sure to have a plan for clearing and deicing parking lots, driveways and other paved surfaces.

Paying just as much attention to in-plant risks as upstream and downstream risks can go a long way in helping to maintain operations and a safe workplace.