Contingency planning is how your business prepares for the unexpected. Companies are often defined by how they deal with unexpected disruptions that are out of their control. Being prepared for sudden changes and having a plan to deal with them can be the difference between success and failure in your business. So, take the time to be prepared. You’ll thank yourself later.
Contingency plans can help deal with a variety of challenges, from natural disasters to unplanned personnel changes to sudden shifts in the market. A specific challenge in the current market over the past few years has involved disruptions in the supply chain. These disruptions can affect business as usual for your design selections and specifications. What is your firm doing to deal with this latest challenge?
Conducting a vulnerability assessment
First, it’s important to be aware of and understand the supply chain risks so that you can have a plan to address them. How might they affect your business specifically?
Start with a thorough evaluation of your supply chain network and possible challenges that could upset the flow of products, services and your project timelines. Identify companies you work with – vendors, manufacturers, delivery service and warehouse providers. Understand your current supply chain structure and processes. By charting these out, it will help you identify all stages of the supply chain from manufacturing to final delivery and installation. These are external forces, but you can still somewhat control how you interact with them.
Then identify potential internal vulnerabilities. These are more easily controlled because they are within your operations. If you have inventory, it might be poor inventory management. Or it might be poor application of processes and procedures, or critical software that is dependent on an internet connection or another company’s servers.
Create a contingency plan
A contingency or backup plan refers to preparing a plan to respond to risks or unexpected challenges. Though it takes time to set up a contingency plan, if the unexpected does happen, you and your team – and your clients – will appreciate your having an action plan ready. Once you have done a risk assessment, you are then ready to develop your contingency plan. Even if you are unable to completely resolve the risks or challenges, you should at least be able to lessen their negative impact. Ensure that your entire team understands and has a copy of your contingency plan. To get help creating a contingency plan tailored specifically to your interior design firm, come work with Pearl Collective!
Build strong vendor relationships
Your vendors are a key part of your external team. Identify those vendors with whom you can build and maintain strong relationships. When challenges happen, you may need their help and support. As in any relationship, clear communication is key – both verbal and written. Be sure that there is mutual respect and trust between your team and the vendors. Remember that they are the experts in their field, so you should trust their expertise and respect them as the professionals they are. Establish a strong working relationship. When you identify vendors and manufacturers who share your company’s culture, be sure to value the relationship, as they will be there for you when you face challenges with supply chain risks. They may not be able to solve the problem, but they may have ideas to help you lessen the challenges. They will be part of your team in working with your clients.
Diversify product and materials sources
As mentioned, building strong relationships with vendors is important, but also be sure you work with multiple sources. You may run into challenges with one vendor or manufacturer, but by having multiple sources on speed dial, you increase your chances of accessing a positive outcome. Identify multiple sourcing options as part of your design plan. It pays to have a backup in mind! Once you have developed a strong relationship with specific vendors, they may have suggestions as to other manufacturers to solve your supply problems. Some manufacturers are themselves offering tools that suggest complementary alternatives when an item is unavailable.
Consider inventory buffers and flexible lead times
Be proactive in your project management. Be sure your team is regularly tracking delivery dates. Design projects around products and materials that are in stock. Be conservative in developing your project schedules, including extra time to allow for possible delays. Learn more about project management by reading our guide here!
Client communication and transparency
As is true throughout the design process, client communication and transparency are crucial. Establish a system to keep clients informed about the status of their project as well as any potential delays. Weekly updates help manage client expectations and lessen the possible risk of disappointment. Regular communication helps them feel more involved in the process. Even if the project is on time and on budget, proactive weekly communication will be appreciated by clients. It can also clarify misunderstandings quickly.
Maintaining transparent and consistent communication with clients is crucial. Firms should establish a system, such as automated weekly updates, to keep clients informed about the status of their project and any potential delays.
Financial planning and budgeting for disruptions
Supply chain disruptions can also cause increased costs. By being proactive and prepared, you can avoid having to absorb unexpected expenses. Incorporate clauses in your contract that are adjustable to account for possible supply delays and increases in costs. Additionally, if your firm can respond to disruptions quickly, you will spend much less on procurement compared to a slow response time. Become known as the firm that can quickly identify alternatives or make specification decisions quickly to take advantage of quick-ship programs. Not only will your firm benefit financially from being prepared, but your clients will appreciate the financial benefit of your being prepared, as well as the positive impact on the timeline.
Review and improve after a disruption
Interior design is a creative business and a business involved in change. After all, that is often what a client wants when they reach out to you: creative change. Just as in the design area of the business, it is important to be ready to be flexible and open to change in the business area of your design business. Because the design business is regularly shifting, if you need to implement your contingency plan, it might involve different challenges than those it was created for. Consequently, at least once annually, you should regularly review and test your plan to be sure it is current.
These combined strategies should help you form a flexible contingency plan to be proactive and prepared to address supply chain disruptions.