Supply Chain & Resilience
On a normal day, fragility and efficiency look identical: the single cheapest supplier is the efficient choice, until the week they fail. This module converts supply-chain surprises into rehearsed events: map what you buy, split what's critical, cushion what can't be split, and score the people you depend on.
A. The Criticality × Substitutability Map
Take twelve months of purchase data. For each significant input ask two questions: how badly does the business break if this stops arriving, and how easily can someone else supply it? Four zones, four playbooks:
| Zone | Profile | Right Move |
|---|---|---|
| Strategic | Critical + hard to substitute (custom components, sole-licensed imports) | Dual-source; deepest buffers; quarterly scorecard; genuine relationship |
| Bottleneck | Low spend + hard to replace (a specific coating, one certified lab) | Buffer generously: stock is cheap vs the disruption; pre-qualify an alternative |
| Leverage | High spend + many suppliers (standard raw material, packaging) | Negotiate hard; rotate share across 2–3 vendors; thin buffers |
| Routine | Low spend + easily substituted (consumables) | Automate ordering; spend zero management attention |
The scariest items are rarely the biggest spend lines; they're the small bottleneck items nobody has re-examined since the original PO.
B. Dual-Sourcing Protocol (The 70/30 Rule)
Dual-source strategic items; buffer bottleneck items; rotate leverage items. When you dual-source, structure it deliberately:
SPLIT: 70/30. Primary keeps majority and commitment; secondary stays warm, qualified, and shipping monthly. A 95/5 split is theatre.
QUALIFY FIRST: The secondary's material must pass your full quality process in normal times. Approvals done under shortage pressure are where quality escapes happen.
SPLIT GEOGRAPHY: Two suppliers in one industrial cluster share the same floods, power cuts, and sub-suppliers.
DOMESTIC HEDGE: If primary is an importer, a domestic secondary at a 10–15% premium converts "no material for 8 weeks" into "thinner margin for 8 weeks."
The 30% is not a cost. It is a rehearsal you run every month.
C. Buffer Logic (Days of Cover)
A buffer is an insurance premium, not dead stock. Two numbers per item are enough:
| Zone | Days of Cover Target | Replenishment Trigger |
|---|---|---|
| Strategic | 30–60 days | Reorder fires at worst recent lead time + variability margin. If deliveries ranged 3–7 weeks, plan on 7. Use the supplier's demonstrated lead time, never the quoted one. |
| Bottleneck | 60–90 days (cheap to hold, catastrophic to lack) | |
| Leverage | 10–15 days | |
| Routine | Reorder cycle only |
1. Hold buffers upstream: raw material is cheaper, less perishable, and more flexible than finished goods.
2. Buffer capacity, not just stock: standing production-slot agreements or a jobwork partner kept warm with small orders provide cover that never sits on your balance sheet.
QUARTERLY REVIEW: Untouched for a year → probably too fat. Dipped into monthly → your trigger ignores real lead times.
D. The Five-Metric Supplier Scorecard
Supplier performance drifts: slowly, then suddenly. Score strategic and bottleneck suppliers quarterly; vendors behave differently when they know they're measured against an alternative.
| Metric | What It Measures | How to Score | Weight |
|---|---|---|---|
| OTIF | On-time, in-full reliability | % of POs delivered complete and on time | 30% |
| Quality | Rejection rate at inward inspection | % accepted first pass | 25% |
| Price stability | Variance vs agreed rates; warning period on increases | 5 = holds rates with notice · 1 = surprise mid-order revisions | 15% |
| Responsiveness | Speed and honesty with bad news | 5 = flags problems early · 1 = you discover them yourself | 15% |
| Financial health | Payment-terms pressure, key-person risk, stress signals | 1–5 judgement, fresh eyes each quarter | 15% |
Share scores with suppliers twice a year, and reward the top performers with volume or terms; a scorecard that only punishes gets you quietly deprioritised by your best vendors. Wire the "hold payment for GST non-filers" policy (Module 03) into onboarding terms.
E. Origin-Country Exposure Check
A Mumbai distributor invoicing in rupees does not insulate you from an export restriction two borders away. For every strategic and bottleneck item, record the country of ultimate origin, not the vendor's address:
1. LIST strategic + bottleneck items → country of ultimate origin.
2. FLAG any single country supplying >40% of strategic inputs.
3. FOR each flag → is there a qualified domestic or third-country alternative? India's localisation push means more domestic options exist than your five-year-old vendor list reflects.
4. PRICE the hedge (premium %) vs the worst case (weeks of stoppage) → decide deliberately, in writing.
The full playbook, with the 90-day implementation plan: Supply Chain Resilience for Indian MSMEs.
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You can try to install this yourself, or you can partner with us to deploy it in 90 days.
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