By Jennifer Bisceglie on July 21, 2020
COVID-19 has highlighted the fragility of our deeply interconnected global economy, and the supply chains that sustain it. Many organizations are several months into this crisis and are still improvising solutions.
While many contractors have figured out stopgap measures and formed immediate plans to clear away to most dire supply chain issues, progress towards a full economic reopening and a resumption of “normal business” remains halting. Dr. Anthony Fauci himself has stated that reopening the economy will not be “a light switch you can turn on and off.” The suppliers many contractors depend upon will reopen at varying rates, each facing their own unique obstacles to recovery.
Those obstacles are not exclusively COVID-related either. Many contractors will also be soon contending with the rollout of the Cybersecurity Maturity Model Certification (CMMC) and Section 889 of the NDAA, two new restrictions that will introduce added concerns over information and supply chain integrity for the Defense Industrial Base (DIB).
That’s why it’s more important than ever that contractors prioritize building a resilient supply chain strategy. Companies will need to prioritize their limited resources during these tough times, investing strategically to ensure they are there for their employees and federal customers when they need them most. After caring for their staff, contractors should strongly consider investing in bolstering their supply chains. More robust preparation and stronger supply chains are essential to a fuller and more optimistic economic recovery – and to prevent the most severe impacts from future disasters.
30-60-90 Day Plan for Supply Chain Resilience
As we move towards reopening, businesses will need to be prepared to move swiftly and combat delays. With many businesses and suppliers potentially rushing to reopen at once, logistical throughput issues will be commonplace. I’ve spent time consulting some of the world’s foremost experts on supply chain management and leveraging my own thirty-plus years of experience in the industry to draft a 30-60-90 day plan for reopening.
30-Day Plan: Create Supply Chain Visibility
The first steps federal contractors should take in trying to get their hands around this crisis is to reach out and confirm the operational status and continued business plans of their suppliers. Fostering clear and direct communication with your suppliers is vital. Mark Weatherford, California’s first CISO and Department of Homeland Security’s first Deputy Undersecretary for Cyber Defense says: “Remember that your suppliers also have supply chain dependencies that have probably been disrupted. It’s important to begin communicating with your supply chain as early as possible to give them time to restart their own supply chains.”
Contractors should spend the first 30 days after receiving critical federal or private support, inspecting their supply chains, and finding opportunities to create visibility. Consider using the following 3, easy questions, to ascertain if your suppliers, and their suppliers, and their suppliers are stable and ready to resume operations:
- How financially healthy are they? Do they have enough solvency to withstand several more months of inactivity? What services or products have they cut back to maintain operations?
- What is their capacity? What capacity will they have in the coming months? What is their timeline for returning to full operations?
- Finally, what is the labor situation? Contact your supply chain partners and vendors to ensure they are taking proper precautions on behalf of their workforce. How are they ensuring hygiene and safety? Are they able to operate with a reduced in-person workforce? What steps are they taking to build labor resilience?
This level of insight into supplier operations doesn’t have to end with the pandemic. It should become a permanent part of your supplier relationships. Consider implementing processes such as the Failure Modes and Effects Analysis scoring model to help discover and assess supply chain risks. Prioritize those risks using a system that can visually represent them and leverage databases to track compliance and risk information. Incorporate data from third-parties and leverage real-time monitoring applications to better understand your supplier’s risk posture.
60-Day Plan: Begin Recovery Planning and Bake-In Resiliency
After you have a handle on your third parties’ current risk posture and the unique challenges they may be facing, you need to start preparing for the long-term. Contractors may need to implement unorthodox solutions to survive the coming months and years.
As you look towards recovery, examine historical trends specific to, and evidence related to your sector of contracting to focus in on where you can best invest to speed a return to full production. Consider how similarly sized and positioned companies have responded to a major crisis in the past, such as the 2003 SARs outbreak. Even much smaller historical disruptions may have useful lessons to teach you that can be scaled up to meet the present disruption.
In addition to your current suppliers, you should also be keeping tabs on viable alternatives. You don’t want to be caught in the lurch if a key third-party goes down. Maintaining sufficient agility to enable an easy switch from a standby vendor to an alternative is crucial towards continuity.
90-Day Plan: Build a Sustainable, Agile Business Model
Making these changes to emerge from COVID is good, but building this kind of resilience into your permanent operating strategy is better and vital to preventing future disruption. Consider creating a Chief Risk Officer role within your contracting organization to embed risk-awareness into how you do business. A dedicated, experienced risk expert can ensure that the supply chains that make your product or service offering possible are continuously available. The old model of annual supplier checkups just doesn’t cut it anymore.
Similarly, your identified alternatives and contingency plans should not disappear when normalcy returns. Make these new, more agile supply chains permanent. This will better ensure your business doesn’t have market access interrupted at the next major disruption and safeguards your federal customers from a sudden lapse in mission-critical services. A single supplier for every product or service cannot be the norm. Every key third party needs a backup.
Lastly, you should invest in permanent, technology-based solutions. There are tools out there that can analyze your vendor networks and warn you of vulnerabilities before the next disaster strikes. Prioritize technology that enables real-time alerting to potential threats to enable your organization to respond swiftly and decisively.
COVID-19 did not create the vulnerabilities our federal supply chains are now suffering, it merely exposed them. While the damage done to lives and livelihoods will be immensely difficult to repair, we can still seize this pandemic as an opportunity to build stronger, healthier supply chains and consequently: a stronger, healthier economy.
To learn more about supply chain risk plans during COVID-19, make sure to look out for Jennifer’s appearance on our New Normal in Government Contracting series!
For assistance in all your procurement activities at this time, be sure to reach out to our team of contract experts today!
About Jennifer Bisceglie
Jennifer Bisceglie is a much sought-after expert on third-party and supply chain risk, and the development of new technologies that foster business intelligence. With 25 years of industry experience managing risk in the global economy, Jennifer founded Interos as a supply chain and vendor risk consultancy, providing unique analyst-driven risk management. In 2019, Jennifer recognized the emerging power of Artificial Intelligence (AI) and Machine Learning (ML), transforming the company into a product-driven organization and establishing the Interos Platform: a game-changing technology that automates the discovery and response to third party risk in every tier of global supply chains.
As a woman business owner, Jennifer is also a long-time advocate for empowering other female entrepreneurs, working on behalf of organizations including Women Impacting Public Policy (WIPP), where she served as a Chairperson from 2010 – 2016. Jennifer was also previously selected as the U.S. delegate to the W(omen’s) 20, an engagement group to the G20 focused on addressing gender inequality.
About Interos
Interos protects customers brand and operations from risk in their extended supply chains and business relationships. The first AI-powered platform for eliminating multi-party, multi-factor risk from 3rd, 4th, to nth tier parties, Interos automates discovery, detection, and response to financial, operations, governance, geographic, and cyber risk. Designed by experts and leveraging the company’s 15 years of experience in managing the world’s most complicated supply chains, Interos provides real-time risk management for the largest commercial brands in manufacturing, financial services, and aerospace and defense.