No man – or business – is an island. We are all part of an interdependent community. For example, a restaurant can prepare all of its dishes in-house, but the ingredients have to come from somewhere else. This creates potential exposures. What if a special ingredient that is the centerpiece of your Friday night special doesn’t arrive until Saturday? What if your once-fresh seafood is delayed for days?
Your restaurant depends on a stable supply chain. If the chain becomes broken or damaged, the immediate and long-term consequences, both to your finances and to your reputation, can be dire. This is why it is important to conduct a risk assessment of your supply chain. What supplies do you depend on, what risks do they involve, and how can you mitigate those risks?
What supplies do you depend on?
You already know who your suppliers are. For risk management purposes, you need to look at your supplier list from a few new angles.
- Reputation: What do you know about the supplier? Have they been in business for a long time? Are they recommended by others? Have your interactions with the supplier been positive so far?
- Location: Where is the supply located? Is it across town? Or halfway around the world?
- Importance: How important is this supplier to your business? Could you get by without it? Or would losing this supplier create a catastrophe?
- Alternatives: Can you get the supplies elsewhere if needed? Can you do so on short notice?