The coronavirus pandemic is transforming our society in a fundamental way. In the world of business, the pandemic has a huge impact on companies’ risk management and supply chains.
Thus far, companies’ risk management and preparations for exceptional circumstances have primarily involved maintaining continuity plan documents. Many companies have either never prepared a proper business continuity plan (BCP) or their plans have been limited.
As a result of the virus, however, companies are starting to understand that every organization should have a sufficiently comprehensive contingency plan, and even this is not enough. Plans must be tested, regularly assessed, and the activities included in the plan must be trained.
Looking for alternative suppliers for materials and products
Right from the start of the current crisis, it became clear that the pandemic is likely to have significant impacts on the availability of products and materials. These days, product supply chains are long and complex, which makes them highly vulnerable. During the coronavirus crisis, companies have been unable to manufacture many of their products as a result of a supplier’s failure to deliver a single component.
In some businesses, this is more complex and demanding due to a statutory issue known as material compliance. What this means is that if one component of a product must be replaced by a substitute component, the documentation concerning the manufactured product must be changed before the delivery of the product to customers. A new component must meet also related requirements like US Conflicting Minerals Act or REACH. This makes substituting materials and components in the production chain difficult.
In the future, larger companies will be more eager to look for alternative suppliers for their materials and products. Companies will become better at determining who is in charge of these alternative suppliers, draw up related agreements in advance and test the products provided by the alternative suppliers.
Placing more value on standards related to the supply chain
Suppliers are also required to prepare comprehensive contingency plans, which will also be reviewed systematically. In the future, suppliers will be required to indicate and document that they have done their share in planning, testing and checking. It will be increasingly common to require companies to obtain various supply chain related standards, such as ISO 28002.
Here at NordCheck, we are experts in risk management and compliance activities. We provide our customers with solutions that enable them to manage their legal requirements, quality, responsibility, risk management and continuous improvement measures. We compile all information related to these activities into a single system.
How is your organization’s contingency plan doing? Contact us, and we will be happy to tell you more about the topic!
Written by Kai Linnervuo, COO and Founder of NordCheck Oy and Janne Järvenoja, lawyer and CEO at NordCheck.