It should come as no surprise that a disruption to the supply chain of any company offering its goods to the public could have disastrous effects. From not being able to stock shelves, to a possible loss in labor force, to unrealized sales, to reputational harm, there is a multitude of things that could go wrong if a company cannot produce the goods it operates to sell.
Blue Bell Creameries in Kansas has been going through this very situation these past months and its ability for recovery remains to be seen. As described by the Wall Street Journal, Blue Bell has been linked to an outbreak of listeria, possibly, resulting in the deaths of three (3) people. Blue Bell has been forced to temporarily shut down a production facility in Oklahoma to allow for thorough inspection and cleaning. Fortunately for Blue Bell, they maintain other plants capable of increasing production while the inspection occurs. However, for smaller companies with fewer plants, the consequences could be far more deleterious.
Business owners must be sure to take any possible steps to mitigate the chances of a supply chain disruption, but preparing means of prevention is only the first step. It becomes far more essential to ensure that a disruption plan has been established and can be implemented efficiently without any great losses. For instance, Blue Bell maintained other production facilities that could be used to make up for lost production at any one plant. For companies with a single facility, it would be prudent to consider how quickly a new facility could be acquired and how long it would take before production is stabilized.
There are other means by which a producer could limit their exposures in the event of a disruption. The company should ensure the integrity of the contracts it maintains with any downstream vendors that supply the raw materials or equipment used at the facility. Before they sign contracts with any vendors, companies should ask that the vendor provides them with evidence of having adequate levels of insurance in place in the event that something happens. Then the company will be able to transfer the liability back to the vendor who has given assurances of their ability to cover such losses. We achieve this for our clients by establishing and tracking compliance for their vendors.
Lastly, it would be prudent of the company to maintain proper levels of insurance on the facility to cover losses that may occur whether they be as a result of a listeria outbreak or simply a fire at the location. This insurance can provide coverage for lost time if there is a significant loss to the production levels and use of the facility.
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