Crisis Management 101: A Supply Chain Primer

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If you live in the supply chain, you are familiar with disruptions. In some cases, those disruptions rise to the level of a crisis. Remember when the Evergreen vessel got stuck in the Suez Canal? For anyone with product on that ship, that was a crisis.

But there are many other kinds of crisis supply chain planners must deal with, and it is these crises that often rise to the level of C-suite involvement. Think about a cyberattack that paralyzes a network. Or a company tractor-trailer involved in a deadly accident. How about the failure of a bank where all your assets are tied up? And, as unlikely as it sounds, what about a situation of workplace violence?

Where are the crisis plans?

Most of these are rare circumstances, but for businesses that face an existential crisis, navigating the days and weeks ahead will impact the organization’s finances at a minimum, and perhaps even its survival. And yet, most companies do not have a crisis management plan in place. According to ReputationManagement.com, 59% of businesses have experienced a crisis, but a 2023 survey conducted by Capterra found that just 49% have a crisis management plan in place.

“Crisis communications plans are crucial for disseminating information during a critical situation,” Capterra noted in the report. “In fact, of business leaders who have activated their plan, nearly all (98%) said it was either very (77%) or somewhat (21%) effective.

The most common crises are cyberattacks (28%) and technology failures (22%), which make up more than half of all crisis events.

Why you need a crisis plan

In the supply chain, most practitioners are familiar with creating scenarios to deal with disruptions, but what about true crisis? After all, supply chain loves to talk about building resilience, but there is no greater resilience than company survival.

According to resilience firm Bryghtpath, “crisis management is the process of ensuring that your organization is prepared for potential disruptions, has a process in place to collaborate and communicate during a critical moment, and has a defined process to manage short and long-term recovery efforts.  Finally, a defined process to capture lessons learned from the crisis and use those lessons to improve your preparedness for the next disruption.”

Crisis management is not just a C-suite function. While the plan begins in the C-suite, crisis management is often a team effort and the key communication person during a crisis may be a marketing or public relations specialist, not the CEO.

To start, experts suggest building a crisis management team, which may contain C-suite, but it also will likely include department heads, human resources and even supply chain professionals. The team should include people from different roles since a crisis will have varying impacts across departments.

What are the next steps?

Once a team is in place, start by clarifying roles.

“Make it clear who is responsible for what and how to get in touch with them. Then share that plan with everyone who will need to know before something happens. Short crises are so much better than long, drawn-out failings,” Janet Fouts of Tatu Digital Media, noted in a Forbes Coaches Council post on crisis management.

From there, the team should develop a playbook of potential risks, how each will impact the business, and what procedures and protocols should be followed. For instance, in the event of a cyberattack, do you notify your customers and data partners immediately and what level of detail should you disclose to them?

Crisis experts also suggest building a rolodex of outside consultants that could help. This could be a crisis management firm, or people specialized in dealing with specific crisis, such as cybersecurity experts.

Another big step in the process is the creation of a clear communication structure. Many companies, the experts warn, fail when it comes to communicating. Too many voices create confusion both internally and externally. Make sure everyone is aware of their roles so decisions can be made quickly and communicated effectively.

“Most people in a crisis panic and make rash decisions. Leaders with emotional intelligence take time to evaluate the situation, are mindful of the impact on the team and organization and collaborate to decide on the best way forward. It may still be painful, but it will be done with integrity,”  Frances McIntosh of Intentional Coaching LLC advised in the Forbes post.

No organization can prepare for every potential crisis, but well-prepared firms can navigate through them. Experts suggest having a plan, seeking outside help when necessary, and most importantly, learning from experience.

“After the crisis has passed, take the time to reflect on what happened and how you responded. Identify what worked well and what didn't, and use that information to improve your crisis management processes moving forward,” wrote consultant Ronald Wilson II, in a LinkedIn post on crisis management.

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