2 min read

#DisasterReady: Business Continuity And Your Vendors

Aug 29, 2016 6:30:00 AM

DisasterReady_Vendors.jpgManufacturers have long been concerned with protecting their businesses from supply chain disruption. But this risk can apply well beyond the manufacturing industry. Business continuity risks exist for any organization working with third-party vendors. Think of all the vendors you work with. Phone, internet, subcontractors, suppliers, etc. If one of them had their own significant business interruption, how would it impact you?

Fortune 500 businesses like Caterpillar, Walmart and GE ensure their suppliers have business continuity plans in place before they will award a contract. Your business is just important - whether you are a health and human services organization, general contractor, or a manufacturer of widgets.

Consider this scenario: You are a general contractor who has been awarded a large construction project. As part of the bidding process, you obtained pricing from the various subcontractors you will hire to assist with the project. What happens if disaster strikes one of those subs? Sure, there may be a long line of others who can step in and perform the work, but at what cost? Does it end up lowering your profit margin on the job? Does quality suffer because it wasn’t your “tried and true” partner? Does the project get delayed, costing you penalties?

Regardless of your business size or industry, your vendors should be a key component of your business continuity planning. A disaster at a vendor could likely mean a disruption or even a disaster for your company. Significant disruptions with your vendors or to your supply chain can impact your revenue, market share, production, and distribution – all of which affect your bottom line.

How can you find out if your vendors are #DisasterReady? Don’t just run through a checklist asking simple yes or no questions. You need to get more specific and ask your vendors questions relating to the products and services they provide to you. This will lead you past the superficial answers to help uncover their true recovery capabilities.

The following are some questions to consider asking your critical vendors:

  1. What does your business continuity/recovery plan look like? (Ask for an actual copy of the plan.)
  2. When was your business continuity plan last tested and updated?
  3. How long will it take you to begin supplying the goods/services we are contracted to receive following a business interruption? How are you going to accomplish this?

Asking these questions of your vendors provides the information you need to ensure they will be able to come through for you in the event disaster strikes them….which will keep their disaster from becoming yours.


Written by Gibson

Gibson is a team of risk management and employee benefits professionals with a passion for helping leaders look beyond what others see and get to the proactive side of insurance. As an employee-owned company, Gibson is driven by close relationships with their clients, employees, and the communities they serve. The first Gibson office opened in 1933 in Northern Indiana, and as the company’s reach grew, so did their team. Today, Gibson serves clients across the country from offices in Arizona, Illinois, Indiana, Michigan, and Utah.