The most successful businesses make contingencies for worst-case scenarios. Major supply chain disruptions, from labor shortages through to natural disasters, can dramatically impact production and reduce your capacity to fulfil contractual obligations. This is particularly prevalent in the fine chemicals industry with a supply chain comprised of numerous integral links (manufacturers, sales channel partners, etc.). How can you create robust contingency plans that enable you to be flexible and responsive in the face of business disruption? Here are five things to consider.
- Safety Stocks for Raw and Finished Goods
A common challenge in fine chemicals business contingency planning (BCP) is how to best manage safety or buffer stocks for raw and finished goods. Conventional inventory management techniques can work for critical raw materials, where key properties like lot size and shelf life are taken into consideration. Stockouts resulting from low safety stock can be extremely damaging to any company’s bottom line and brand value. However, there is a cost burden associated with carrying too much safety stock in the form of net working capital. Determining and balancing these risk/cost factors is critical for any fine chemical company.
- Redundant Manufacturing Options on the Same Site
Redundancy can increase reliability. By duplicating key processing components at a single site, you benefit from a built-in fail-safe that can improve system performance or serve as a replacement during periods of disruption. The type of redundancies depends on the complexity and size of your manufacturing assets. However, supplying customers from redundant production units may also introduce change management issues, requiring additional qualifications by your customer for multiple production units.
- Manufacturing at Alternate Sites
Having alternate sites available to share the burden of fine chemical production is another crucial method of dealing with disruption and meeting contractual obligations. If production assets require unplanned maintenance or if—for whatever reason—your facility is forced to close, having a backup site is crucial to maintaining production output and limiting the loss of revenue. It can also help preserve relationships with critical partners and go a long way to creating more resilient fine chemicals supply chains.
- Safeguarding Against Natural Disasters
Severe weather events can have a dramatic impact on any industry, but there is an added layer of responsibility for fine chemicals manufacturers. Disruptions following natural disasters can prolong recovery efforts; erode public trust in the industry, which can have a tangible fiscal impact; and can open the door to costly litigation. The frequency of severe weather events is poised to increase as our climate changes, so it is important that fine chemical companies are proactive with safeguarding infrastructure and adapting to changing conditions.
- Outsourcing to Custom Manufacturers
Many companies now routinely sub-contract work to trusted fine chemical custom manufacturers. This can be a crucial cog in your business contingency plans—provided you choose a reliable partner with a secure infrastructure. This partner can help manager and provide solutions for all four of the previous considerations.
The CABB Approach to Contingency Planning
When you partner with CABB to outsource your fine chemical manufacturing you are also benefitting from a trusted partner in BCP. Fine chemical manufacturing often requires more than the standard “toll manufacturing” relationship. At CABB, we offer a full portfolio of BCP services, from multi-source raw material procurement, redundant manufacturing, and inventory management. We welcome your inquiries and look forward to earning your business.
