Supplier continuity and contingency planning

We chart the suppliers behind the group's revenue and measure how exposed each one makes you. For the day one of them fails, we write the plan: the alternative, the trigger for switching, the time it takes and the cash it needs, approved by the board in advance.

A continuity plan is a financial document first and an operating one second.

• A critical-supplier map ranking suppliers by revenue at risk, substitutability and recovery time.
• A concentration analysis by product line, entity and country of origin.
• A contingency plan per critical supplier: alternative, trigger, switching cost and lead time.
• A continuity funding paper that prices the cost of holding alternatives ready against the loss avoided.
• A decision protocol naming who releases funds and approves a switch.

• You see the share of revenue that rests on a single-source supplier.
• Your board counts the critical suppliers that hold an approved alternative.
• Each critical supplier shows its days to switch.
• Cash reserved or committed to continuity sits beside the amount planned.
• Plans reviewed in the last twelve months are listed, so the board sees which are current.

Single points of supply are efficient until they fail. Few groups have counted how much revenue each critical supplier carries or what a second source would cost to hold ready, so the first conversation about an alternative happens in the week the supplier stops.

• One supplier provides most of a product line and there is no approved second source.
• The group has never priced the switch to an alternative.
• A supplier's financial health has not been reviewed since the contract was signed.
• Your largest customer contract depends on an input from a single origin.
• Nobody has been told who decides, and with what authority, if supply stops.

Chairmen and chief executives of groups with a concentrated supply base: a single food importer, one packaging producer, one technology vendor, a sole carrier. Also the finance heads who would have to fund the response.

Qasim Abbas has spent more than 16 years inside Gulf family-based and venture-backed groups. Your continuity plan names the suppliers whose failure would reach cash first and sizes the reserve behind each one.

The map and plans live in the CFO Room, and the continuity funding paper prices each alternative against the loss avoided. See how fees work.

Is a second supplier always needed?

The plan compares the options on cost: for some suppliers the cheaper protection is a larger buffer or a clause in the contract, for others a second source.

How often does it need to be updated?

Once a year at minimum, and after any change in a critical supplier, a major customer contract or the group's markets.

Name the supplier whose failure you would fear most in a private briefing. We size the revenue riding on it and set out what its contingency plan contains.